DUBAI: Talabat, the leading food delivery service in the Middle East and a subsidiary of the German company Delivery Hero, is poised to launch its initial public offering (IPO) in Dubai next week.
The forthcoming IPO, anticipated to exceed $1 billion, represents one of the most significant public listings in the United Arab Emirates (UAE) for the year. As the Gulf region experiences a retail spending renaissance, Talabat’s strategic timing aligns with a broader governmental push to diversify economies and reduce reliance on oil revenues.
Founded in Kuwait in 2004, Talabat has expanded its operations across several countries, including the UAE, Oman, Qatar, Bahrain, Jordan, Iraq, and Egypt, boasting over six million active customers by July 2023.
The company has diversified its offerings beyond traditional food deliveries to include groceries and health and beauty products, therefore tapping into a growing demand for on-demand convenience.
The IPO is noteworthy not only for its potential financial impacts but also for its implications for Delivery Hero.
A critical opportunity
With a majority stake held by Delivery Hero since 2015, the listing could facilitate a much-needed reduction of the parent company’s substantial debt, which has seen its share prices decline by over 74 per cent since their peak in January 2021.
Analysts view the IPO as a critical opportunity for Delivery Hero, describing it as a low-risk venture with the potential for significant benefits to its equity.
According to Muhammad Hassan, PwC Middle East’s Capital Markets Leader, the outlook for initial public offerings (IPOs) in the GCC region remains decidedly optimistic for the remainder of 2024, despite experiencing a relatively subdued third quarter.
“A multitude of companies across diverse sectors are actively preparing for IPOs, signaling robust market activity ahead.”
Talabat’s competitiveness in the market is underscored by its high valuation, which analysts suggest could fall between €11.5 billion and €13.5 billion.
The company faces competition from regional players such as Saudi Arabia’s Jahez and Careem, owned by Uber Technologies. However, its established presence and diversified offerings position it as a leader in the on-demand delivery sector.
As Talabat prepares for its IPO, the outlook remains optimistic amidst the changing economic landscape of the Gulf.
The success of recent IPOs, such as Lulu Retail’s $1.72 billion raise, highlights a reinvigoration of market confidence, making this a pivotal moment for Talabat and Delivery Hero.
The impending IPO not only reflects the potential for financial success but also represents a strategic maneuver that could reshape the dynamics of the delivery service industry in the region and beyond.
