DUBAI: Delivery Hero SE, the German food delivery giant, plans to sell a 15% stake (3.49 billion shares) in its Middle Eastern subsidiary –Talabat – and raise about $1 billion, potentially marking one of the largest initial public offerings (IPOs) in the region for the year.
The share sale will run from November 19-27 for UAE retail investors and on November 28 for professional investors.
Talabat has hired Emirates NBD Capital PSC, J.P. Morgan Securities PLC and Morgan Stanley & Co International PLC as joint global coordinators and joint book-runners and expects to start trading on the Dubai Financial Market (DFM) on or around December 10.
The proceeds are earmarked for general corporate purposes and optimisations in its capital structure. This financial maneuvering indicates not only a response to local market conditions but also a proactive approach to enhance shareholder value.
Nonetheless, the competitive landscape poses challenges for Talabat. The entry of aggressive rivals, particularly in lucrative Gulf markets, may impact its market share and valuation.
Analysts have pointed out instances where similar firms have faced profitability pressures due to new entrants. This aspect of the market environment raises questions about the long-term sustainability of Talabat’s current valuation, potentially reaching $12 billion, including debt.
Delivery Hero’s expansion strategy through acquisitions has further solidified its position in the region. Acquiring Zomato’s food delivery operations and the grocery platform InstaShop exemplifies its commitment to capturing a larger market share. Talabat’s existing presence across multiple Middle Eastern countries enhances its strategic value, positioning it as a critical player in a highly competitive sector.
