June 30, 2017 / 2:12 PM / a month ago

Delivery Hero jumps on debut in boost for tech IPOs

3 Min Read

FRANKFURT (Reuters) - Shares in $5 billion online takeaway food delivery group Delivery Hero (DHER.DE) rose as much as 9 percent on their Frankfurt stock market debut, boosting prospects for other potential technology listings this year.

The company had priced its initial public offering (IPO) at 25.50 euros a share, the top end of the price range, selling shares worth about 1 billion euros ($1.1 billion) and giving it a market capitalization of 4.4 billion euros.

The stock rose to 27.80 euros after it started trading on Friday.

"It's a positive sign for Europe's tech sector, which has seen very few IPOs this year," an equity capital markets banker said, adding that one of the sector's next listings is likely to be meal kit group HelloFresh and music streaming service Spotify after the summer break.

In Europe, Norwegian technology group Evry EVRY.OL joined the Oslo bourse this month and X-FAB Silicon Foundries floated on Euronext, but the sector's European offerings have raised less money than counterparts in the United States, where messaging app Snap (SNAP.N) listed recently.

The 10 high-tech IPOs in Europe this year have fetched proceeds of about $2.4 billion, Thomson Reuters data shows. The same number of flotations in the Americas has raised $5.2 billion, lifted by Snap's $3.9 billion IPO.

A successful listing for Delivery Hero was important for German e-commerce investor Rocket Internet (RKET.DE), which cut its stake to 25.7 percent from 35.7 percent in the deal, having failed to bring a company to market since 2014.

Delivery Hero is using the 483 million euros in proceeds to pay off its debt, grow its own business and for acquisitions to help to fend off the increasing competition.

The company is still loss-making, mainly because of costs related to its rapid growth, but it is aiming to break even next year.

"We are profitable in an increasing number of markets," Chief Executive Niklas Oestberg said, adding that the company now wants to use equity primarily for expansion.

Delivery Hero's listing contrasts with Thursday's lackluster debut for Blue Apron (APRN.N), which had reduced its price in the shadow of Amazon.com's (AMZN.O) deal to buy retailer Whole Foods, leaving investors worried about the prospects of the meal-kit industry.

Sources close to the deal said that the Delivery Hero order book was 16 times oversubscribed, leaving many investors with smaller allocations than expected and 40 percent of investors without any shares at all.

($1 = 0.8752 euros)

Additional reporting by Alexander Hübner; Editing by Mark Potter and David Goodman

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