European and British funds shun Deliveroo

British and European investors have overwhelmingly shunned Deliveroo, with data showing that only four out of every 18,000 investment funds on the continent have invested in the food distribution company since its disastrous initial public offering in March.

Deliveroo’s IPO was christened Deliveroo the worst in the history of London after its share price fell 26% on the day of its inauguration. After two months, its shares continue to trade more than a third below its 390p share price, closing at 251p on Friday.

Investors protested before the IPO, saying yes avoid the company due to concerns about their dual-class contribution, their governance, and their labor standards.

According to Morningstar data, the only UK-based fund that revealed it had invested in Deliveroo is managed by River and Mercantile for wealth manager AFH Group. The other three funds to hold the shares are the Spanish fund Engineers Stocks Europe and two funds based in Europe by Morgan Stanley and Franklin Templeton.

Morgan Stanley, Franklin Templeton, AFH Group and River and Mercantile declined to comment. Caja de Ingenieros did not respond to any requests for comment.

Almost all of the investment funds that supported Deliveroo are headquartered in North America, including funds from Fidelity, T Rowe Price and Federated Hermes, according to Morningstar.

Tom Powdrill, chief executive of Pirc, the UK’s chief adviser, said that “it was striking that those closest to the action, both in terms of listing and where Deliveroo is doing well part of their business, they are much less likely to invest ”in the London-based company.

“If I were an American investor, I think the lack of internal support for stocks would be something that needs to be monitored,” he added.

He said this was potentially driven by the growing interest of European investors in environmental, social and governance issues.

Colin Baines, investment commitment manager at the Friends Provident Foundation, said the coronavirus pandemic had highlighted social issues such as working conditions. “Having Deliveroo in your wallets is a safe way to brand customers who may not be integrating social issues [into investment decisions] so good “.

Deliveroo said more than a third of its stake comes from UK-based investors, including the British arms of international asset managers. Morningstar data covers 40,000 free equity funds worldwide, including 18,000 domiciled in the UK and Europe.

Shares of other online food distribution companies, from Ocado to Just Eat Takeaway, have also performed lower in recent weeks, as investors feared the sector would lose now that diners can return. in restaurants.

But according to a recent report from Takealytics, a research team that tracks food apps, the delivery “seems to have held up well,” thanks in part to the promotional activity.

Large institutional investors had also expressed concern about Deliveroo’s dual-class structure, giving Deliveroo co-founder Will Shu improved voting power. This stock structure excludes it from the London premium listing, leaving some investors unable to buy the shares.

“It simply came to our notice then [because of the rights the chief executive will hold for three years]. The CEO could run the business however he wants for years to come, ”said Andrew Millington, head of equities at Aberdeen Standard Investments, ahead of the IPO.