Deliveroo value trimmed amid backlash over pay

DELIVEROO has priced shares for its stock market float at the lower end of expectations after a backlash from top investors over its treatment of delivery riders.

The food delivery firm said it had narrowed its pricing range from between 390p and 460p to between 390p and 410p.

It means Deliveroo’s maximum potential market valuation has fallen from £8.8bn to £7.9bn ahead of its debut as a publicly traded company tomorrow. Founder and boss Will Shu also stands to make less than before, with his maximum haul from selling shares falling from £30.8m to £27.5m and his remaining stake falling from £572m to £530m. The decision came after a string of heavyweight City investors criticised the pay and conditions of Deliveroo’s riders and said they would not back its long-awaited float. Aviva, Legal & General, M&G, BMO Global, Aberdeen Standard and others are among those that have voiced concern. Deliveroo insisted that it had still received ‘very significant demand’ for the float and that the more conservative pricing was due to ‘volatile market conditions’. But in a another blow, Scottish Mortgage became the latest investor to snub the listing as fund manager James Anderson – an early backer of electric car maker Tesla – said he was ‘lukewarm’ about it. He claimed that Deliveroo would find it ‘difficult’ to replicate its UK success around the world and that he backed rivals such as US-based Grubhub and China’s Meituan instead. His comments come despite the fact his firm, Baillie Gifford, holds a small stake in Deliveroo through its private equity division. Major backers set to make tens of millions of pounds from the listing include Amazon, which is selling shares worth up to £95.5m and will retain a stake of up to £860m.

The row over Deliveroo’s riders intensified last week following claims that some of them earn as little as £2 per hour.

At the centre of the controversy is the company’s classification of its riders as ‘selfemployed’, meaning they are not entitled to minimum wage, holiday pay or sick leave.

And in practice many riders earn less than the National Living Wage, set at £8.72 per hour, according to a report by the Bureau of Investigative Journalism, based on hundreds of invoices. Deliveroo rejected the findings and claimed that riders earn an average of £13 per hour during busy periods.

It says its business model gives riders ‘freedom to choose when and where to work and which deliveries to accept and reject’.