Investor Standard Life Aberdeen said on Friday it had sold its shares in fashion retailer Boohoo, describing the company's response to allegations of worker abuse at supplier factories as "inadequate".
SLA, previously one of Boohoo's biggest investors, has sold most of its stock, a spokesman for the asset manager said, confirming an earlier report in the Financial Times.
However, Jupiter Asset Management, Boohoo's second-biggest investor with 10% of its stock, said it had added to its position this week.
Boohoo shares have lost around a third of their value this week after The Sunday Times reported that workers in a factory in Leicester, central England, who were making clothes destined for Boohoo, were paid as little as 3.50 pounds ($4.39) an hour.
The firm said it would commission an independent review of its supply chain in Britain
(Graphic: Boohoo, https://fingfx.thomsonreuters.com/gfx/mkt/yzdpxrexgpx/boohoo.PNG)
Lesley Duncan, deputy head of UK equities at SLA unit Aberdeen Standard Investments, said the firm had invested in Boohoo since its listing, but said there had been insufficient progress to improve working conditions.
The response was "inadequate in scope, timeliness and gravity", Duncan said, adding: "We strive to use our influence as significant investors to achieve progress.
"In instances where our standards have not been met, divestment is both appropriate as responsible stewards of our clients' capital and aligned to our goal of investing for better outcomes."
Jupiter said however, that "following conversations with (Boohoo) management about its strategy, the fund manager decided to top up the position based on share price weakness".
It planned to "continue to engage with the business regarding the ongoing investigation", the asset manager said in a statement.
(Reporting by Carolyn Cohn; editing by Sujata Rao and Louise Heavens)
By Carolyn Cohn