[dropcap]N[/dropcap]aspers investment Delivery Hero, a Berlin-based food takeout business backed by Germany’s Rocket Internet, announced plans to list on the Frankfurt stock exchange in the next few months to fund expansion in an increasingly competitive market.
Delivery Hero, about 35% owned by Berlin-based startup mill Rocket, plans to sell new stock worth about €450m (R6,5bn) in the initial public offering. Existing investors will also sell shares, the company said Tuesday in a statement.
The IPO would give a much-needed reprieve to Rocket and its CEO, Oliver Samwer, who has been trying to take another start-up from his investment stable public since European apparel e-retailer Zalando listed in 2014. Rocket stock heading into this week had fallen by about 50% since its own IPO two-and-a-half years ago and Samwer has been under pressure to show his investment company can generate more hits.
“A Delivery Hero IPO is an important event for Rocket Internet because it’s a way to prove it still has good companies in its portfolio,” said Lucas Boventer, a Warburg Research analyst who recommends buying Rocket shares. An offering that values the takeout business above €3,5bn euros would be viewed “positively” by investors, he said.
Delivery Hero’s value was between €3,5bn and €4bn after a €387m investment by South Africa’s Naspers last month, according to a person familiar with the start-up’s finances. Naspers owns about 10%.
Rocket Internet rose as much as 1,9% in early Frankfurt trading. Naspers was little changed shortly after market opening in Johannesburg.
Delivery Hero competes with app-takeout services including Just Eat, GrubHub and Takeaway.com. Newer rivals include Amazon.com, which is expanding its Amazon Fresh same-day grocery delivery offering, and Uber Technologies’ food-on-wheels service Uber Eats.
That means Delivery Hero is spending heavily to grow. The company, founded by its Swedish CEO Niklas Östberg in 2011 and purchased in part by Rocket in 2015, has continued “substantial investment in organic growth and acquisitions”, it said today. It operates under a variety of brands in more than 40 countries.
Delivery Hero posted a loss before interest, taxes, depreciation and amortisation of €116m on sales of €347m. The Foodpanda unit, another Rocket property Delivery Hero acquired last December, accounted for €45m of that loss on sales of €50m, according to the company.
In 2015, Delivery Hero lost €175m on sales of €203m. It also operates under brands including Lieferheld in Germany and Foodora, and exited the UK and China last year.
The offering would rank as the biggest largest IPO this year in Germany, which is trying to convert a flurry of start-up activity and venture capital investing in Berlin, Munich and elsewhere into exits for investors. Pizza and pasta franchise chain Vapiano last week announced plans to list in Frankfurt in a $95m offering this summer, preceded by four other offerings, one of which has been postponed, according to data collected by Bloomberg.
Citigroup, Goldman Sachs and Morgan Stanley are acting as the joint global coordinators and book runners of the offering, with UniCredit Bank, Berenberg, Jefferies and UBS as additional book runners. — Reported by Aaron Ricadela and Stefan Nicola, (c) 2017 Bloomberg LP