Delivery Hero to Pursue IPO of 15% of Talabat Unit in Dubai

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(Bloomberg) — Delivery Hero SE unveiled plans to list its Talabat unit in Dubai in what could be among the region’s biggest initial public offerings of the year.

The German food delivery firm plans to sell a 15% stake in its Middle Eastern subsidiary, according to a statement on Sunday, retaining a majority interest. It could amend the size of the offering subject to required approvals of the Securities and Commodities Authority of the United Arab Emirates, it added.

The share sale could raise about $1 billion, Bloomberg News reported in September. 

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The listing is expected to take place in mid-December, the Berlin-based company said, with proceeds set to be used for general corporate purposes and to optimize its capital structure.

Talabat currently plans to pay a minimum dividend of about $100 million in April relative to fourth quarter financial results, plus another $400 million in two installments in October 2025 and April 2026, according to the statement. Thereafter, dividends are expected to be paid twice each calendar year, with Talabat targeting a net income payout of 90%.

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The IPO comes amid a flurry of new share sales in the Middle East. Oman’s state-owned energy company raised a record $2 billion by listing its exploration and production unit last month, and is preparing to sell shares in its methanol business. 

Private sector companies are also rushing in. Lulu Retail Holdings Plc raised $1.72 billion in the United Arab Emirates’ biggest listing of the year. IT services firm Alpha Data is eyeing an Abu Dhabi listing, while online cosmetics retailer Nice One, health care provider Almoosa Health, and tech firm Ejada are lining up IPOs in Saudi Arabia.

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Talabat reported $6 billion in gross merchandise volumes in 2023, up from just under $4 billion in 2021. Its free cash flow increased by 64% year-on-year to $226 million in the six months ended June.

The Dubai IPO could value Delivery Hero’s “crown jewel” at as much as $12 billion including debt, according to a Bloomberg Intelligence report. 

However, the entry of aggressive competitors could dent Talabat’s market share and valuation, analyst Tatiana Lisitsina wrote. She cited the example of Saudi Arabian firm Jahez, whose profit outlook was hit by the entry of Chinese food delivery giant Meituan. While Talabat doesn’t operate in the kingdom, lucrative Gulf markets could attract competitors, Lisitsina noted.

Delivery Hero has been cementing its position in the Middle East through acquisitions. It bought the Indian firm Zomato’s food delivery business in the UAE in 2019, and the online grocery platform InstaShop in 2020. The Talabat brand also has a presence in Bahrain, Egypt, Oman, Qatar, Kuwait, Iraq and Jordan.

—With assistance from Gabriela Mello.

(Updates with details from second paragraph.)

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