Delivery Hero (DHER.DE) is gearing up for an initial public offering (IPO) of its highly profitable Emirati subsidiary, Talabat, on the Dubai stock exchange, the German food delivery company announced, leading to a boost in its shares on Thursday.
Shares surge
Following the announcement, Delivery Hero’s shares initially surged by 7% but later moderated to a 3% increase by 0839 GMT. This comes after the company’s shares had plummeted by approximately 85% from their peak in January 2021, as investor enthusiasm for food delivery stocks waned post-pandemic.
“We believe it’s the right moment for regional investors to become part of this business,” said interim finance chief Marie-Anne Popp in an interview with Reuters, although she did not disclose specific plans for the proceeds from the IPO.
According to Barclays analysts, the Berlin-based company could potentially use the funds to reduce its debt, which currently stands at 4 billion euros ($4.4 billion).
Delivery Hero intends to list Talabat, its fastest-growing unit, on the Dubai Financial Market in the fourth quarter by selling existing shares while retaining a majority ownership.
Positive market response
Jefferies analysts noted that the IPO announcement was the primary factor driving the positive market response. They added that a successful IPO would strengthen Delivery Hero’s balance sheet, particularly following the sale of its Asian subsidiary, foodpanda. Additionally, the IPO could highlight the value of Talabat, a quality asset that is somewhat overshadowed within Delivery Hero’s broader corporate structure.
In the Middle East and North Africa (MENA) region, Delivery Hero reported a 31% increase in sales, reaching 874 million euros in the second quarter, outpacing growth in other regions. This announcement coincided with the IPO news.
Last year, Talabat’s gross merchandise value (GMV), which measures the total value of goods sold through its platform, reached 5 billion euros. Talabat operates across the Middle East, serving customers in countries including Bahrain, Egypt, Iraq, Jordan, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.
