The UK’s biggest fund manager is expected to shun Deliveroo’s upcoming stock market float, along with a growing number of other investors, due to concerns about the food delivery company’s treatment of workers – which one described as a “ticking bomb”.

Legal & General said on Thursday it was “unlikely” to participate, while the Montreal-based BMO Global Asset Management and CCLA, which invests for churches and charities, said they would not be buying shares when Deliveroo lists on the London Stock Exchange, and that the company’s labour practices were an important factor informing their decisions.

The first few months of 2021 had “brought a step-change in focus on industry regulation as we see increasing signs of countries and governments reviewing the gig economy status”, said L&G.

The investment firm also raised concerns about Deliveroo’s dual share structure, which gives a controlling vote to the company’s founder, Will Shu, for three years.

They spoke out after two of the UK’s largest investment managers, Aviva Investors and Aberdeen Standard Investments, cited concerns over treatment of workers for their decision to skip Deliveroo’s initial public offering (IPO).

On Thursday, 27 investors discussed the float and worker rights issues in a meeting organised by ShareAction, a group that campaigns on investment issues. The meeting came as a survey of hundreds of Deliveroo couriers’ invoices revealed many receive an hourly rate below the minimum wage, with one reporting being paid as little as £2 an hour.

Couriers for the company, which counts them as independent self-employed contractors without rights to the minimum wage or holiday pay, are set to take coordinated action over pay and conditions ahead of the IPO.

Riders in Australia, France and Italy will hold public protests, and are pledging not to log on to the app on Friday. In the UK some riders are planning to strike on 28 March while the Independent Workers Union of Great Britain is organising protests across the UK on 7 April, the day the company debuts on London’s stock market.

Phil Webster, a portfolio manager at BMO, which is one of the largest banks in North America, said labour issues represented a “ticking bomb on the side” for Deliveroo, which contributed to making it “uninvestable”.

He highlighted increased competition from Just Eat Takeaway, an Anglo-Dutch rival that is seeking to expand its own delivery business with workers who are directly employed, as opposed to Deliveroo’s contractors.

At the same time the threat of regulation could add to costs, making Deliveroo’s efforts to reach profitability much harder. The company lost £224m in 2020, even as demand for takeaway deliveries boomed.

“You’ll wake up one morning and your stock will have halved because the government says this is not acceptable,” said Webster. “I just cannot see past the workers’ rights. I think you are storing up a massive hole in the business model.”

Deliveroo, which was co-founded in 2013 by Shu, a London investment banker, is seeking a valuation of up to £8.8bn.

James Bevan, chief investment officer of CCLA, a £10bn manager of money mainly for charities and church organisations, said there were many issues preventing it from investing in Deliveroo’s IPO, including concerns over its labour practices.

Bevan also raised concerns about Deliveroo’s failure to make a profit during a boom time for food deliveries and Shu’s controlling shares, which will mean other shareholders would not have a say in the business for three years.

“From a governance point of view we would like there to be a reasonable connection between the economic risk and the votes that you carry,” Bevan said.

Andrew Millington, head of UK equities at Aberdeen Standard, said: “We will not be taking part in the Deliveroo IPO as we are concerned about the sustainability of the business model, including but not limited to its employment practices, and also the broader governance of the business.”

Deliveroo is one of the most prominent British companies in the gig economy, with its couriers paid on the basis of single jobs rather than a steady salary associated with employee status.

A UK supreme court decision to classify workers at Uber as employees has highlighted the risk of legal action and increased costs for companies such as Deliveroo. Deliveroo has set aside £112m to cover the possible costs of drivers taking legal action around the world.

A Deliveroo spokesperson said: “This proud British business looks forward to listing on the London Stock Exchange. Deliveroo has received very significant demand from institutions across the globe. The roadshow began on Monday and the deal was covered by demand across the full price range by the end of the first morning.

“Demand has continued to build since then, including via our community offer, and we look forward to welcoming new shareholders next week alongside our currently highly respected existing investors.”