Delivery Hero raises size of Talabat’s IPO to $2bn

Delivery Hero has boosted the size of Talabat’s initial public offering (IPO) to 20 per cent due to significant investor demand for what is set to be the biggest listing in the UAE this year.

The German firm initially planned to raise $1.52bn (Dhs5.6bn) by offering a 15 per cent stake in Talabat.

Delivery Hero said that it had increased the number of ordinary shares offered in the IPO of its Middle East business to 4.7 billion, constituting a 20 per cent stake, at Dhs1.60 apiece, the top end of a range that started at Dhs1.50bn to raise as much as $2bn.

The indicative share price implies a market valuation of around $10.2bn at the top of the range. Previously, Emirates NBD, one of the banks on the IPO, said that Talabat could be valued at up to $14.4bn, while Bloomberg Intelligence estimated an enterprise value of as much as $12bn.

The delivery platform, which boasts more than six million active customers and over 119,000 active riders, is offering the shares in two tranches – to institutional investors and retail investors – between November 19 and November 28.

The final offer price will be determined at the end of the book-building process, with a trading debut on the Dubai Financial Markets (DFM) scheduled for December 10.

The company’s IPO attracted three cornerstone investors: UAE Strategic Investment Fund, Abu Dhabi Pension Fund, and Emirates International Investment Company, which agreed to subscribe for shares worth as much as Dhs918m.

Talabat is working with Emirates NBD Capital, J.P. Morgan Securities and Morgan Stanley & Co International PLC as joint global coordinators and joint book-runners on the IPO.

To attract investors, the delivery platform plans to pay a minimum dividend of about $100m in April relative to Q4 financial results, plus $400m in two instalments in October 2025 and April 2026.

Thereafter, it expects to pay dividends twice each calendar year, targeting a net income payout of 90 per cent.

Founded in 2004 in Kuwait, Talabat has expanded to serve customers in the UAE, Oman, Qatar, Bahrain, Jordan, Iraq and Egypt, with more than 65,000 active partners as of the end of September 2024. It reported $6bn in gross merchandise volumes in 2023, up from just under $4bn in 2021. Free cash flow surged by 64 per cent year-on-year to $226m in the six months ended June 2024.

The delivery firm joins a wave of private company listings in the Middle East this year, with IT services firm Alpha Data considering listing in Abu Dhabi.

Bahrain’s AlAbraaj Restaurants Group seeks to raise $23.9m (BHD9m) in its IPO on the local bourse, Oman’s OQ Base Industries plans to raise $490m, while Saudi Arabia’s capital markets regulator recently green-lit IPOs for cosmetics retailer Nice One and hospital operator Almoosa.

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