The week in investor relations: Deliveroo’s tumble, no to ‘say on climate’ and Hong Kong hit by trading halts
– Deliveroo shares plummeted on the firm’s stock market debut after a number of major UK investors expressed concerns about its gig economy worker model, reported the BBC. Shares in the food delivery business were offered to investors at 390p each, but closed 14 percent lower at 284p per share, having fallen 30 percent initially. The company had hoped for a share price of up to 460p but reduced the range after a number of high-profile fund managers said they would not be buying the shares. Deliveroo had offered a set amount of shares to customers via its app.
– Despite Deliveroo’s poor market start, Reuters reported that in Spain, delivery app Glovo raised an additional €450 mn ($528 mn), calling it the largest financing round secured by a Spanish start-up. Glovo, based in Barcelona, has seen demand soar during the Covid-19 pandemic, as locked-down customers turned to its quick delivery service that provides everything from food to toiletries. It currently has around 10 mn users. Glovo said it would use the funds raised to expand further in the 20 markets where it operates.
– The Wall Street Journal (paywall) reported that Chris Hohn’s campaign to make large public companies set near-term targets for carbon-emissions cuts is encountering challenges from US companies and asset managers. More than a dozen companies in Europe, Canada and Australia have signed up to Hohn’s ‘say on climate’ initiative, according to ISS. The drive has also aimed to make companies’ emissions targets subject to annual shareholder votes. In recent weeks, however, two US companies decided to oppose Hohn’s proposed shareholder resolutions. Some large US fund managers have also taken issue with aspects of the proposals.
– Trading in more than 50 Hong Kong-listed companies was suspended this week, after a number of firms failed to report earnings ahead of the March 31 deadline, reported Bloomberg. It’s not uncommon for some companies in Hong Kong to have to suspend trading on April 1, but the number this year compares with just nine last year and 25 in 2019. The news agency said the trading halts could dampen investor sentiment toward Hong Kong’s stock market ‘where the benchmark gauge briefly slumped into a technical correction late last month amid setbacks in the city’s vaccine rollout and as traders rushed to sell pricey stocks in the wake of rising bond yields’.
– In other Hong Kong news, shares of online video-streaming site Bilibili fell as much as 6.8 percent in the firm’s Hong Kong debut on Monday, according to Nikkei Asia, which said the company, known as ‘China’s YouTube’, joined a series of recent disappointing listings in the city. Investors in Hong Kong regularly flock to new listings, lured by a potential first-day pop, which has all but vanished since February amid the global technology sector sell-off and China’s crackdown on the country’s tech conglomerates, the news site reported. Bilibili is backed by Sony, Tencent Holdings and Alibaba Group Holding, and raised $2.6 bn from the IPO.
– Reuters reported that Deutsche Bank said its CEO Christian Sewing will transfer oversight of the investment and corporate bank to board member Fabrizio Campelli as part of a revamp of the management board. Deutsche Bank was one of the few major banks in the world to assign day-to-day oversight of investment banking to its CEO. At most banks, other board members oversee the division. Sewing, whose contract was extended to 2026, will also take charge of human resources at management board level.
– As environmentally friendly investing grows at an exponential rate, Tariq Fancy, former chief investment officer for sustainable investing at BlackRock, has come to the conclusion that it ‘is definitely not going to work’, reported The Guardian. ‘I have looked inside the machine and I can tell you [that] business does not have this,’ Tariq said. ‘Not because these are bad people but because they run for-profit machines that will operate exactly as you would expect them to do.’ Investors have a fiduciary duty to maximize returns to their clients and as long as there is money to be made in activities that contribute to global warming, no amount of rhetoric about the need for sustainable investing will change that, he believes.
– Vanguard, the $7 tn investment company, pledged to slash emissions across its investment portfolios, reported the Financial Times (paywall). The paper said the second-largest asset manager globally is among the newest signatories of the Net Zero Asset Managers Initiative, which launched in December, with signatories committing to set targets to cut emissions by 2030 and achieve net zero by 2050. Vanguard joins 42 other big investors, including BlackRock, Aberdeen Standard Investments, Allianz Global Investors and Macquarie Asset Management.
– According to the FT, black employees held a lower share of top US financial services jobs in 2018 than they did more than a decade earlier, highlighting the shortcomings of Wall Street’s efforts to improve racial diversity. Black staff account for 13 percent of all finance staff and are the industry’s biggest ethnic minority but, in the most senior jobs, they are the only demographic whose share fell from 2007 to 2018, the FT’s research found. The fall in representation – from 2.87 percent to 2.62 percent – comes amid multiple initiatives by financial services companies intended to improve racial diversity by identifying, training and mentoring talent from ethnic minorities. ‘It begs the question of all the efforts and all the energy that was put into this: what are they doing and why is none of this working?’ said Dee Marshall, CEO of Diverse & Engaged, a diversity consultancy that focuses on financial services.