Delivery Hero seeks to raise up to $1.5 billion from Talabat IPO

German delivery company Delivery Hero SE is seeking to raise up to $1.5 billion from an initial public offering (IPO) of its Middle East unit, Talabat, in a deal that would rank as one of the region's largest in 2024, Bloomberg reported.

The German food delivery firm will offer a 15% stake in Talabat, or 3.49 billion shares, at a price of 1.50 dirhams ($0.41) to 1.60 dirhams each, the company said in a statement. The final offering price will be announced on November 29, and the shares are set to start trading on the Dubai stock exchange on December 10.

A share price at the top of that range would value Talabat at $10.2 billion, slightly below the parent company's market capitalization of $11 billion. The United Arab Emirates Strategic Investment Fund, the Abu Dhabi Pension Fund and Emirates International Investment Co. will underwrite $250 million worth of shares as core investors, Talabat said.

The deal comes amid a wave of listings in the Middle East, where companies have raised about $10 billion in new share sales through 2024. However, some recent large deals have had weak debuts. Hypermarket chain Lulu Retail raised $1.7 billion in an Abu Dhabi offering last month, shortly after a $2 billion IPO by a unit of Oman's state-owned energy company. Both companies had weak debuts, with the Omani firm closing 8 percent below its offering price.

Still, Talabat's margins and higher growth prospects support a premium valuation, says Tatiana Lisitsina of Bloomberg Intelligence, who in a report last month called the company "the crown jewel" of Delivery Hero's portfolio. The company plans to pay at least $100 million in dividends in April, based on its fourth-quarter financial results, plus $400 million in two tranches, in October 2025 and April 2026. After that, dividends are expected to be paid twice each calendar year, with Talabat targeting a net payout ratio of 90%. Talabat operates in eight countries - the United Arab Emirates, Kuwait, Oman, Qatar, Egypt, Jordan, Iraq and Bahrain. The company has strengthened its position in the region, helped by Delivery Hero's acquisition of Indian company Zomato's food delivery business in the UAE in 2019 and online grocery platform InstaShop in 2020.

Emirates NBD Capital PSC, JPMorgan Securities and Morgan Stanley have been appointed as global coordinators for the initial public offering. Abu Dhabi Commercial Bank, Barclays, EFG-Hermes, First Abu Dhabi Bank, Goldman Sachs, ING Bank and UniCredit are bookrunners on the deal.