The Food Delivery Startup Deliveroo has planned to cut the upper valuation target in its London initial public offering of about $1.3 billion after some investors balked at the company’s treatment of riders. The startup set guidance 3.90 pounds to 4.10 pounds a share.
The Food Delivery Startup initially marketed the offering at 3.90 pounds to 4.60 pounds, valuing it at as much as 8.8 billion pounds. A spokesperson said that the company lowered the top end of the valuation target to 7.85 billion pounds. Few U.K.’s biggest asset managers said that investors are concerned about the company treatment of couriers isn’t aligned with socially responsible investing practices. Many delivery riders are refusing to make deliveries when the shares begin trading. Investors also voiced their concern that the company’s dual-class voting structure is counter to good corporate governance.
The company said the initial public offering prospectus would affect the rider model or approach to rider status and our operating practices were successfully challenged or if changes in law require us to reclassify our riders as employees. Uber Technologies Inc., which runs the UberEats service announced that it will reclassify its 70,000 U.K. drivers as workers and providing them minimum wage and vacation pay. The dual-class structure is common in the US and it allows the founders to keep control even after an IPO.