Delivery Hero aims to raise around 1 bln euros via listing


Reuters

UPDATE 2-Delivery Hero aims to raise around 1 bln euros via listing


* Delivery Hero to sell up to 39 mln shares in IPO
    * Investors like its global footprint
    * To offer almost 19 mln shares in capital increase
    * Shares on offer at 22.00-25.50 euros apiece
    * Shares to start trading on June 30

 (Adds comments from investors, bankers, source familiar with
company)
    By Sophie Sassard and Arno SchuetzeLONDON/FRANKFURT, June 19 (Reuters) - Delivery Hero is
aiming to raise around 927 million euros through a stock market
listing that could value the online takeaway food delivery group
at up to 4.4 billion euros.
    Some investors consider this a hefty price tag given that
the Berlin-based company has yet to turn a profit and faces
fierce competition from regional players like Britain'sJust Eat
<JE.L> and the Netherlands'Takeaway.com <TKWY.AS>, as well as
global groups like Amazon <AMZN.O>.and Uber [UBER.UL].
    Delivery Hero will become the fourth major online food
delivery firm to go public in the past few years globally,
following Grub Hub <GRUB.N>, Just Eat and Takeaway.com, which
have all seen their shares soar since listing.
    The sale will provide a much-needed boost to German
e-commerce investor Rocket Internet <RKET.DE>, which holds a 35
percent stake in Delivery Hero, making it the biggest holding in
its portfolio. [nL8N1IX17U]
    The initial public offering in Frankfurt, which includes the
sale of new shares, is part of Delivery Hero's plans to grow and
fend off the threat from Uber and Amazon.
    Major European investors are expected to jump in and buy
shares in the IPO because of the online food delivery market's
growth potential. But there are also concerns about increasing
competition.
    "I haven't been inspired to look at it.", said Steve
Sherman, who manages European equities at BNP Paribas Investment
Partners. "Our challenge with the delivery aggregation companies
has been the limited barriers to competition, which make us
worry that they won't make much money even if the demand is
good," he said. "Perhaps Delivery Hero will be different."
    Delivery Hero has invested heavily to expand globally and is
now present in 42 markets in Europe, Middle East, North Africa,
Latin America and Asia Pacific.
    It has access to a total delivery market worth 72 billion
euros ($80.65 billion), a source familiar with the matter said.
This compares with 28 billion euros for smaller British rival
Just Eat, which operates in 12 markets, and 13 billion euros for
Dutch competitor Takeaway.com, which is present in about 10
markets, the source said.
    "The valuation is punchy ... but it's the same for any
growth business across industries as investors are desperate for
growth", one fund manager at a major European institutional
investor said. "Food delivery offers a huge potential if you
consider that only about 80 percent of restaurants do
deliveries."
    Delivery Hero's margins at 10-11 percent currently lag its
competitors, with Just Eat at 15 percent and Grub at 17 percent.
But it could boost margins to 13 percent when it handles the
delivery itself, and still has room to raise fees, the source
familiar with the matter said.
    Just Eat and Takeaway.com trade at between 6 and 6.5 times
expected 2019 sales, according to a Breakingviews calculation
based on forecasts of analysts polled by Thomson Reuters. To
achieve a similar multiple, Delivery hero would need to double
its sales by 2019. [nL8N1J3153]
    Delivery Hero, which has a delivery network for 271,000
restaurants in more than 40 countries, said 2016 sales rose 79
percent to 297 million euros, or 71 percent after accounting for
disposals and acquisitions. [nL8N1HW25T]
    Two bankers not involved in the deal said they expected
Delivery Hero's fundraising would be successful. They think the
company is well positioned to succeed thanks to its global
footprint and strong backers, which include Rocket Internet.
    An investment in Delivery Hero by South African e-commerce
firm Naspers <NPNJn.J> last month also sent an encouraging
signal. [nFWN1IE0ZS]
    Delivery Hero will offer a total of 39 million shares, with
19 million of which priced at 22.00 to 25.50 euros apiece via a
capital increase, Delivery Hero said on Monday. Fifteen million
shares will come from existing shareholders.
   An additional 5.1 million shares indirectly held by Rocket
could be placed in an over-allotment, Delivery Hero said.
    The shares are expected to start trading on the Frankfurt
Stock Exchange on June 30.
    Founded in 2011, Delivery Hero has grown rapidly and now
employs over 6,000 people, providing a digital platform to order
meals from more than 150,000 restaurants in Europe, the Middle
East, Latin America and Asia.

($1 = 0.8927 euros)

 (Reporting by Tom Sims and Maria Sheahan in Frankfurt and
Sophie Sassard in London; additional reporting by Arno Schuetze
in Frankfurt.; Editing by Himani Sarkar and Jane Merriman)
 ((Tom.Sims@thomsonreuters.com; +49 69 7565 1242; Reuters
Messaging: tom.sims.thomsonreuters.com@thomsonreuters.net))

Keywords: DELIVERY HERO IPO/ (UPDATE 2)



This article appears in: US Markets , Stocks , IPOs
Referenced Symbols: AMZN , GRUB , JE , NPNJN , RKET


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