IPO planned
Delivery Hero continues to grow and monetizes its Middle East subsidiary
This audio version was artificially generated. More info | Send feedback
The food delivery company Delivery Hero is feeling increasing demand and is exceeding expectations in its key business figures. The announced IPO of a subsidiary is also making investors happy. An analyst speaks of a high-quality division. The income goes exclusively to the MDAX group.
Supported by increasing demand, Delivery Hero has continued its growth path. The food delivery company also announced the IPO of its Middle East subsidiary Talabat. “It's a little bit in our DNA to constantly evaluate what we should do with our portfolio,” said interim finance chief Marie-Anne Popp. She did not provide any further details about the transaction or how the proceeds would be used.
The debut puts a high-quality division in the spotlight that has previously been overlooked in the overall group, wrote analyst Giles Thorne from the investment bank Jefferies. According to Delivery Hero, the food delivery service Talabat, which is active in the Middle East and North Africa, will be listed on the Dubai Stock Exchange from the fourth quarter. The shares offered would all come from Delivery Hero's portfolio. However, the German company wants to retain the majority of Talabat. Its shares rose by a good eight percent, making them the front runners in the MDAX small-cap index. RBC analysts value Talabat at 5 billion euros. This implies a ratio of company value to sales of 1.3.
The Middle East and North Africa region has long been the group's growth driver. In the second quarter, the gross merchandise volume (GMV) traded on the platform rose by almost 37 percent to 3.1 billion euros. That's almost four times as big as Delivery Hero overall.
“Optimally position” daughter
Talabat's planned IPO is intended to anchor the subsidiary more firmly in the region, said Popp. “We believe it is the right time, now or in the near future, to invite regional investors to participate and help further strengthen our MENA operation.” It was the right decision to “optimally position” Talabat. According to Deutsche Bank, the Talabat business operates in nine countries in the Middle East and North Africa and is profitable at the adjusted operating profit (Ebitda) level.
Group GMV rose in the second quarter by ten percent after adjusting for currency effects to 11.9 billion euros. Group revenues increased by a fifth to three billion euros. Thanks to ongoing austerity measures, the operating result in the first half of the year multiplied to almost 241 million euros. All three key figures were above the analyst forecasts compiled by the company.
“We ended the quarter very successfully and expect further growth and a significant increase in profitability in the second half of 2024,” said company boss Niklas Östberg. For the full year, he continued to forecast currency-adjusted GMV growth of seven to nine percent. Group sales are expected to increase by 18 to 21 percent. He predicted an operating result of between 725 million and 775 million euros.
