LONDON – Fast-growing food delivery service Delivery Hero announced plans to IPO on Tuesday. The move should be a boost for Rocket Internet, which has nurtured the company since its early days and put millions of euros into it.
Headquartered in Berlin, Delivery Hero revealed that it plans to IPO “in the coming months” in a bid to raise more money to fund an aggressive worldwide expansion. The company, which has already raised $1.8 billion (£1.4 billion) and is not yet profitable, will aim to raise a further $500 million (£387 million) from investors through the listing.
But it would appear that investors aren’t convinced that the Delivery Hero listing is what Rocket Internet needs, with shares down 2.8% on Wednesday morning.
Rocket Internet, which invests in existing internet companies and builds some of its own, went public on the Frankfurt Stock Exchange in October 2014 in an IPO that valued the company at $8.4 billion (£6.5 billion).
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But following the initial celebrations, the company’s share price fell significantly as investors struggled to understand the company’s strategy and questions were being asked of founder and CEO Oliver Samwer. Rocket Internet’s share price plummeted in 2015 and never really recovered. Today, the company is valued at $3.54 billion (£2.74 billion) – less than half of what it was valued at the time of the IPO.
An IPO is exactly what Rocket Internet needed, analysts at Barclays wrote in a note in April.
“In our view, the key to the story is an IPO of one of the assets in 2017E,” several Barclays analysts wrote in a note to investors in April, saying at the time that Delivery Hero and HelloFresh were likely candidates.
Off the back of the Delivery Hero announcement, a Rocket Internet spokesperson told Business Insider on Tuesday: “We welcome this step by Delivery Hero.”
It’s possible that there are larger market forces at play here, including the Qatar diplomatic crisis, which has had a small impact on some financial markets.