Hero Delivery has revealed its plans for an initial public offering of a share of its Talabat unit in Dubai, in what could be one of the biggest IPOs in the sector this year.
Delivery Hero, the German company that specializes in food delivery, plans to sell a 15% stake in its unit, Talabat, in the Middle East, while retaining the majority, according to a statement was published on Sunday. The statement said that the company may change the size of the offer after obtaining the necessary approvals from the Securities and Commodities Authority.
Bloomberg reported in September that the stock sale could raise about $1 billion.
The company, with headquarters in Berlin, expects the listing to take place in mid-December, with the money directed to general corporate purposes and improving the capital structure.
Talabat currently plans to pay a minimum installment of $100 million next April for fourth-quarter financial results, as well as another $400 million in two installments in October 2025 and April 2026, according to the statement. Profits are then expected to be distributed twice a year, with Talabat aiming to distribute 90% of net income.
The UAE is seeing demand from private sector companies towards public tender contracts. Lulu Retail Holding Company raised $1.72 billion in the largest listing of the year in the UAE. Alpha Data, an information technology services company, is also preparing to list in Abu Dhabi.
The total amount of goods delivered by Talabat will reach $6 billion in 2023, up from $4 billion in 2021, and its free cash flow increased 64% year-over-year to reach $226 million in the six months ending in June.
The IPO in Dubai could value Talabat, which is a jewel in the business of Delivery Hero, at about $12 billion, including debt, according to a Bloomberg Intelligence report.