Deliveroo’s flotation has been snubbed again, this time by a leading tech investor who remains unconvinced by the platform’s model outside of London.
The tech platform is targeting a market cap of almost £9bn in its upcoming London listing as demand soared during lockdown.
The City has largely welcomed the blockbuster float as it tries to attract fast-growing technology firms. The Chancellor Rishi Sunak said the IPO was “fantastic.”
However James Anderson, manager of investment trust Scottish Mortgage, told the Times he was “lukewarm” about Deliveroo because of its overreliance on London and focus on slower growing markets.
Anderson, who has led the investment trust for two decades, is considered one of the City’s leading tech investors having backed success stories like Amazon.
He has backed other delivery platforms like China’s Meituan and Grubhub in the US but said Deliveroo would find it difficult to replicate its success.
“I think that is more difficult for Deliveroo to do,” he said. “I think their model is successful in the unusual economics of London and it’s much more difficult to spread elsewhere.”
The delivery platform has already received criticism from some of the City’s top firms, including L&G and Aviva.
Last week the institutional investors said they would steer clear of Deliveroo’s IPO due to the way the company treats its workers.
Edentree, a London-based fund focused on sustainable investing, today also distanced itself from the float.
Fund manager Ketan Patel said: “Edentree will not be investing in a business model which has little to commend for ESG investors, where the relationship between capital and labour is so asymmetrical.”
Figures compiled by the Bureau of Investigation last week showed one in three delivery drivers earn less than £8.72, the national minimum wage for over-25s.
Despite Deliveroo’s claims that riders are paid more than £10 an hour on average, some were found to earn as little as £2 an hour.
In response to the analysis of pay, a spokesperson said: “Deliveroo riders have the complete freedom to choose when and where to work and can choose which deliveries to accept and which to reject.