Talabat, the Middle Eastern arm of Delivery Hero, is gearing up to launch its initial public offering (IPO) in Dubai next week, according to three sources familiar with the matter who spoke to Reuters. This move is set to be one of the UAE's largest IPOs this year.
The deal, orchestrated by the German parent company for the fourth quarter, could commence as early as Monday, as indicated by two of the sources. It is anticipated that the largest food ordering platform in the Middle East could sell stock valued at over $1 billion, according to two of the sources involved.
Talabat, based in Dubai, and Delivery Hero have both declined to comment on the matter. The IPO is occurring amidst a surge in retail spending in the Gulf region and a wave of public listings, as governments in the region aim to reduce their reliance on oil revenues.
Lulu Retail, a hypermarket chain operator, raised $1.72 billion in its IPO on Wednesday. Founded in Kuwait in 2004, Talabat has expanded its services to cover the United Arab Emirates (UAE), Oman, Qatar, Bahrain, Jordan, Iraq, and Egypt, serving over six million active customers as of the end of July, according to company data.
In addition to food delivery, Talabat offers services for delivering groceries and other goods, including health and beauty products. Germany's Delivery Hero acquired a majority stake in Talabat in 2015. The Berlin-based online food delivery company announced in August that it intends to retain a majority stake, with analysts suggesting that the deal could help reduce its debt.
Delivery Hero's shares listed in Frankfurt have declined by over 74% from their January 2021 highs, which were driven by pandemic-related demand. The IPO is seen as a highly positive catalyst for Delivery Hero's equity, according to Jefferies analyst Giles Thorne, who cited very low execution risk and a significant reduction in the company's debt.
Talabat is considered one of the highest quality on-demand delivery platforms globally, with a valuation of 11.5-13.5 billion euros, according to Thorne. Regional competitors include Saudi Arabia's Jahez and Uber Technologies-owned Careem.
Delivery Hero CEO Niklas Östberg declined to comment on the IPO when asked in an interview with Reuters on Thursday, following the company's third-quarter earnings report. The company's gross merchandise value (GMV), which measures the total value of goods sold, increased by 30% in the Middle East and North Africa (MENA) region, its fastest-growing market, where it also operates through subsidiaries Hungerstation, Yemeksepeti, and InstaShop.
This growth accounted for over a quarter of the group's overall GMV during the period.
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