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GDANSK - Delivery Hero is preparing an initial public offering (IPO) of its lucrative Emirati subsidiary Talabat on the Dubai stock exchange, the German food delivery company said, boosting its shares on Thursday.
Delivery Hero's shares opened 7% higher, but pared gains to trade up 3% at 0839 GMT. The shares have fallen around 85% from their January 2021 highs as investors shunned food delivery stocks after a pandemic frenzy.
"We think it's a good time for us to be having regional investors participate in this business," interim finance chief Marie-Anne Popp told Reuters, without providing details on how the company intends to use proceeds from the IPO.
The Berlin-based firm could use the cash to reduce its 4 billion euro ($4.4 billion) debt, Barclays analysts said.
Delivery Hero plans to list its fastest-growing unit on the Dubai Financial Market in the fourth quarter by selling existing shares in Talabat while retaining a majority stake.
"We see news of the IPO of Talabat as being the main driver of a positive response," Jefferies analysts said in a note.
If the IPO is successful, it would help to improve Delivery Hero's balance sheet after the sale of its Asian subsidiary foodpanda, they said, adding it would also shine a light on a quality asset that is now somewhat lost in the group's corporate structure.
Delivery Hero's sales in the Middle East and North Africa (MENA) region jumped 31% to 874 million euros in the second quarter, growing faster than other regions, according to a statement that came shortly after the IPO announcement.
Last year, Talabat's gross merchandise value (GMV), a metric for delivery firms measuring the total value of all goods sold, hit 5 billion euros.
Talabat serves customers across the Middle East region in countries such as Bahrain, Egypt, Iraq, Jordan, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates.
($1 = 0.9027 euros) (Reporting by Andrey Sychev; Editing by Ludwig Burger and Mark Potter)