Delivery Hero to sell upto 39 million shares in its IPO

Delivery Hero expects its food delivery business to break even during H2 2022 and shares insights on Glovo’s business performance

One of the world’s leading delivery platform Delivery Hero has announced that its food delivery business (including Glovo) is expected to break even during H2 2022.

Operating its service in around 50 countries across Asia, Europe, Latin America, the Middle East and North Africa it can also generate between EUR 0 and 100 million in adjusted EBITDA in Q4 2022, while investments related to its quick commerce business are predicted to peak in the first quarter of 2022 and gradually decline thereafter. Delivery Hero reconfirms its long-term adjusted EBITDA/GMV margin target of 5-8%.

“Delivery Hero has always been investing into growth with the clear ambition of reaching the scale needed to achieve profitability. We have remained confident that through achieving the right size, we are able to bring tremendous benefits to all partners in our ecosystem, as well as to our shareholders,” said Emmanuel Thomassin, CFO of Delivery Hero by adding that the investment strategy has proved to be successful, and the brand is on a solid trajectory to turn their food delivery business profitable during the second half of this year.

It also announced that it has sold USD 150 million worth of its stake in the Latin-American delivery company Rappi in a series of transactions.

Delivery Hero continues to hold an approximate stake of 7.9% in Rappi on a fully diluted basis, currently valued at over USD 400 million based on the Series F valuation.

It first invested in Rappi in its Series B, when the company was valued at approximately USD 400 million. Rappi’s financial performance is a testament to the company’s overall fantastic growth and strong business model. However, Delivery Hero will continue to exercise a disciplined capital allocation, and focus on investments that are in line with the Group’s strategic vision. Over time, the remaining Rappi shares will be monetized at an appropriate valuation.

UK- based food delivery brand Deliveroo said its orders more than doubled in the quarter ending March in its first trading update since its highly-anticipated listing in London last month flopped.

Growth accelerated for the fourth consecutive quarter, the company said, with group orders up 114% year-on-year to 71 million and gross transaction value (GTV) up 130% year-on-year to 1.65 billion pounds ($2.27 billion), reported Reuters.

"This is our fourth consecutive quarter of accelerating growth, but we are mindful of the uncertain impact of the lifting of COVID-19 restrictions,"shared Will Shu, CEO at Deliveroo by adding that demand was strong in both UK and Ireland and its international markets, driven by record new customer growth and sustained demand from existing customers.

"So while we are confident that our value proposition will continue to attract consumers, restaurants, grocers and riders throughout 2021, we are taking a prudent approach to our full year guidance," he added.

Deliveroo was maintaining its guidance for full-year GTV growth of between 30% to 40% and gross profit margins of 7.5-8.0%.

It also mentioned that it was difficult to know how much of the growth was driven by the lack of opportunity to eat out in cafes and restaurants in COVID-19 lockdowns, adding that it expected the rate of growth to slow as restrictions eased.

Deliveroo's float in London was heralded at the debut of the decade, but it soured when the stock fell 30% on the first day, wiping more than 2 billion pounds off the company's initial 7.6 billion pound valuation.

Mobile-based food delivery company Foodpanda on Thursday said it would stick with plans to expand its grocery offerings in Myanmar, despite the uncertainty from a military coup this week, reported Reuters.

Also Read: Foodpanda losses widen by 230% in FY19

"Overall, in 2021, we definitely have it our plans to launch in these four markets," said Abhishek Sahay, Regional Director, Foodpanda.

The brand is also planning to expand grocery delivery service in Laos, Cambodia and Japan.

“Pandamart operates small warehouses placed at key locations so that groceries could be delivered in under half an hour,” he added.

Owned by Delivery Hero, Foodpanda launched Pandamart in 2019 in Singapore.

May Interest: Foodpanda delists many restaurants as it shifts focus to 'dark kitchens'

As of January, it has a presence in 40 cities and eight markets in Asia including Thailand, Malaysia and Bangladesh.

Zomato, an online restaurant discovery and food delivery platform, has raised about Rs 441 crore in a fresh round of funding led by Delivery Hero, Naspers-backed German food-tech major. This round has also seen participation from Chinese investors Shunwei Capital and Saturn Shine.

The capital infusion is part of the ongoing Series I round of Zomato. This round is likely to value the Gurgaon-headquartered company at about $2 billion. 

Delivery Hero will pick up 2.26% stake in Zomato, for an investment of Rs 350 crore. While Shunwei Capital is putting in Rs 35.06 crore for a 0.23% stake.

Last year, Berlin-based Delivery Hero sold its Foodpanda India business to ride-hailing platform Ola. This marked Ola's maiden foray into the food delivery space.

The chief executive of online food ordering firm Delivery Hero expects competition from the likes of Amazon and Uber to make it harder to make money although the German company is still targeting breakeven this year.

Niklas Ostberg, a Swedish former management consultant who founded the company in 2011 said Delivery Hero has the critical mass to fend off the U.S. giants, but admits their move into food delivery could dampen profits.

Ostberg said, "It will be difficult for all the market players to survive. Everybody is fighting for size, because only then you have a chance. It will be hard to make any money as long as competition is as it is right now." As most people only download and use one food delivery app, start-ups spend heavily on marketing to win control of markets. Uber and Amazon can promote food delivery to existing customers and cross-subsidise the business.

The German firm which is the world's biggest food delivery platform covers more than 40 countries in Europe, the Middle East and North Africa, Latin America and Asia-Pacific, and partners with more than 150,000 restaurants.

The company claims to be the market leader in 35 of those countries, although it is battling with Takeaway.com for control of its home market, prompting the chief executive of its Dutch rival to raise the idea of a merger last month.

Ostberg further said acquisitions were less important, now the company has reached scale, although it would still consider "interesting" targets. "We have the size that is necessary to sustain competition.”

Delivery Hero, in which South African e-commerce giant Naspers and Germany's Rocket Internet are major investors, is well placed for more acquisitions after it made a placement of new shares to raise funds.

Delivery Hero, Takeaway.com and Britain's Just Eat have established their positions in market by creating booking platforms that advertise local restaurants, which handle their own deliveries.

The entry of Uber and Amazon into the market has led to company to focus more on managing logistics.

Ostberg said, "Economics may get tougher ... we may compete more and more on the delivery fees. The winner will be the one who is efficient enough to afford it."

Both UberEats and Amazon has built more restaurants in nearly 200 cities around the world, while UberEats alone has   more than 80,000  restaurants while Amazon currently has a food delivery service open to members of its Prime shopping club in cities across the United States and in London.

Last week, Delivery Hero reported a rise of 60 percent in 2017 sales to 544 million euros ($671.68 million) on a like-for-like basis, with growth particularly strong in the Middle East and North Africa, followed by Asia.

Ride-hailing player Ola is making an entry into the food delivery space again, this time by acquiring Foodpanda India from Germany based Delivery Hero Group.

While the companies did not disclose the details of the deal size, sources have pegged the stock-based acquisition at under $50 million. The move will also see Ola invest another $200 million, as it takes on rival UberEats and incumbents like Zomato and Swiggy.

Saurabh Kochhar, former CEO of Foodpanda India has left the company and Pranay Jivrajka, founding partner at Ola has been appointed as the interim CEO of Foodpanda and will work with the existing leadership team at the company.

Bhavish Aggarwal, CEO of Ola said “Foodpanda has come to be a very efficient and profit-focused business over the last couple of years. Our commitment to invest $200 million in Foodpanda India will help the business be focused on growth by creating value for customers and partners. With Delivery Hero’s global leadership and Ola’s platform capabilities with unique local insights, this partnership is born out of strength.”

Ola cab drivers would pick up the food from the partner restaurants and deliver orders that came up when they were driving around the locality. This made a significant dent on the revenue that came from the regular cab rides.

According to analysts, Ola is focussed on diversifying its offerings by making an acquisition in the food delivery segment, after lessons learnt on starting up and failing with Ola Cafe in the past. The $200 million investment in Foodpanda is not a very high figure, so Ola has made a significant entry into acquiring a sizable portion of the food delivery space through this move. Through this deal it will easily take on UberEats, which is also failing to pick up traction for varied reasons, from customer stickiness to high restaurant commission charges at 30%.

Delivery Hero CEO, Niklas Ostberg said “The Delivery Hero Group believes the partnership with Ola, will enable the company to further consolidate markets where it strategically makes sense to collaborated with leading local players. We consider our stake in Ola as a very valuable asset, while Ola’s investment commitment in Foodpanda India is a clear and confident sign to the Indian market”.

Shares in online takeaway food delivery group, Delivery Hero started trading at 26.90 euros in their Frankfurt stock market debut on Friday, 5.5 percent above their offer price of 25.50 euros.

The company had priced its initial public offering (IPO) at the top end of the price range, to raise roughly 1 billion euros ($1.14 billion).

A successful listing for Delivery Hero is important for German e-commerce investor, Rocket Internet, which holds a 35 percent stake in the firm and has failed to bring a company to market since 2014.

Delivery Hero has said it would use the proceeds to pay off debt and for organic growth and acquisitions as it seeks to stave off rising competition. 

Global online food ordering and delivery marketplace, Delivery Hero, has agreed to buy Middle East food delivery platform, Carriage. 

Niklas Ostberg, CEO, Delivery Hero, said, "Kuwait-based Carriage, which operates in the Gulf Council countries, would strengthen Delivery Hero's foothold in a region with significant growth potential."

The financial details of the deal remain undisclosed by the parties.

Major investors in Delivery Hero include Germany's, Rocket Internet and South African media and e-commerce firm, Naspers.

Online food takeaway firm Delivery Hero, one of Europe's biggest start-ups, has raised 387 million euros ($423 million) by issuing new shares to South African media and e-commerce firm Naspers, shareholder Rocket Internet reported.

The share issue means Rocket's stake will be diluted to 33% from just under 38%. Rocket said the valuation was in line with previous valuation rounds, without specifying further.

Berlin-based Delivery Hero, had said last month it could consider an initial public offering (IPO) to raise capital to bulk up and face competition from the likes of Uber.