ALEX BRUMMER: Deliveroo boycott was a betrayal of the public interest

The Deliveroo debacle is being held up as a triumph for stakeholder capitalism.

The herd-like decision of a number of Britain’s big battalion investors, led by Aviva and followed by Aberdeen Standard, Legal & General, M&G et al, to boycott the float on governance grounds is seen as an important moment.

It has been easy to win credit for giving an overpriced float a wide berth on holier-than-thou grounds of rider employment terms and restricted voting rights.

Pots and kettles: Britain’s big battalion investors, led by Aviva and followed by Aberdeen Standard, Legal & General, M&G et al, boycotted Deliveroo’s float on governance grounds

Environmental, social and governance (ESG) investing also requires thinking about the broader public interest. 

Irrespective of the merits of Deliveroo pricing, the Hill review proposals for a liberal attitude towards two classes of shares, to keep London competitive with New York, Hong Kong and other exchanges is all about the public interest. 

The fact that Deliveroo included a sunset clause on super-voting rights for founder William Shu took care of that.

Instead, ‘long’ investors have delivered a devastating blow to confidence in other tech firms lining up to float. We shouldn’t be surprised. 

Over the last couple of decades most of Britain’s big battalion investors have willingly sold the pass.

Tolerance among long institutions towards oversized pay packets for CEOs has opened a gaping divide between directors and the workers that well-rewarded fund managers now claim to love.

The hypocrisy goes deeper. Long fund managers have been happy to stand by and assist in a succession of UK companies being sold to private equity. 

This includes retailers like Debenhams, care homes such as Southern Cross and tech, aerospace and security firms Inmarsat, Cobham, Signature and G4S. No thought is given to the national interest, the impact on high streets and ordinary jobs.

The ESG paragons will sell anything if the price is right. Spare the crocodile tears over Deliveroo riders when the wider public interest of the impact on HQ employment, corporation tax and jobs is disregarded in private equity and overseas takeovers.

Funny money

Among early efforts to create a modern cryptocurrency was the International Monetary Fund’s Special Drawing Rights (SDR). 

It has struggled to win friends in the 77 years since Bretton Woods but likely will receive a boost at this week’s spring virtual gathering of the Fund.

The pandemic put enormous strain on the Fund’s resources. It has dished out new finance to 85 countries and provided debt relief to 29 others. 

The lending spree has left the IMF short of resources should a bigger country need an emergency bailout.

Efforts to put in place new large-scale borrowing arrangements failed so the Fund has come up with the alternative idea of a big $650billion increase in SDRs.

The difficulty is that most of the new SDRs go to richer countries who need them least, and the notional interest rate of 0.05 per cent bears no relation to the risk involved as would happen with a sovereign bond or commercial loan. 

The consequence is that bad regimes, such as Myanmar, could gain access to capital on the cheap.

The SDR issue could be made to stretch further if rich nations lent some of their allocation to poorer ones but this is seen as complicated. Easier to sell some of the oldest cryptocurrency of all: IMF gold.

Dead weight

While on the subject of Covid handouts going to wrong places, wise words from the Bank of England governor who, with more imagination, we could have had: Raghuram Rajan of the University of Chicago.

The former IMF chief economist thinks it was bonkers for Joe Biden to send out cheques to families with incomes above $70,000 a year who will promptly put the money into cryptocurrencies and other get-rich-quick schemes. Late but sage advice.