Markets

Talabat focusing on core markets ahead of listing, says CFO

November 11, 2024, 3:38 PM

A Talabat delivery driver in Doha, Qatar. The business was founded in 2004

Food app’s IPO could raise $1bn
Operates in 8 Mena countries
‘Massive growth’ in home markets

Food delivery app Talabat aims to prioritise organic growth over geographical expansion, its chief financial officer says, as it prepares to launch one of the region’s largest listings.

Delivery Hero, the German parent company of the UAE-headquartered app, announced on Monday that it plans to sell a 15 percent stake in Talabat.

The initial public offering on Dubai Financial Market could raise more than $1 billion. A report by Bloomberg Intelligence estimates that Talabat could be valued at up to $12 billion including debt.

The delivery app, launched in Kuwait in 2004, now operates in eight countries across the Middle East and North Africa.

Khaled Al Faqsh, chief financial officer at Talabat, said: “There’s massive growth in the markets that we’re operating in. It makes absolute sense for us to continue penetrating and investing in those markets rather than distract ourselves and go with the geographical expansion at this stage.”

The IPO will be carried out through a secondary sale of shares, with Berlin-based Delivery Hero retaining a majority interest.

Nearly 3.5 billion shares, each with a nominal value of AED0.04, will be divested.

Five percent will be opened up for retail investors and the remaining 95 percent will be for institutional investors.

“What we’ve seen so far from meetings with investors is that there’s really good excitement from international, regional and local investors,” said Al Faqsh.

Talabat has a workforce of 6,000 people, which includes 480 product and tech engineers. It has 120,000 riders and works with more than 65,000 restaurants and grocery stores.

Earlier this month the company reported a 46 percent increase in third-quarter profits. Net income reached $98 million over the three months, up from $67 million the previous year.

It also recorded a 23 percent year-on-year increase in gross transactions – a common metric for delivery businesses, measuring the total value of goods sold – to $1.92 billion.

Al Faqsh also said Talabat has no plans to follow regional rival Careem by establishing a super-app, which offers ride-sharing and digital payments as well as food deliveries.

“We are not a big believer in the super-app strategy,” he said. “We want to make sure that we continue pushing on the grocery and retail vertical.”

He said the company was also looking at opportunities in health and beauty, pet supplies and pharmacies. “We would like to try to expand to those verticals as well.”

Food delivery companies across Mena generated $680 million in net profit in 2023, a 120 percent year-on-year increase, according to Teaser Research Company.

The Talabat IPO subscription period runs from November 19 to 27 for UAE retail investors. The professional investors’ tranche will open on November 28. The price range will be set through the book-building process.

Trading is expected to start by December 10.