It’s impossible to travel anywhere in Dubai, without seeing a delivery riders in Talabat’s orange and yellow livery weaving their motorcycles through bumper-to-bumper traffic carrying food and grocery orders. They are an equally common sight across the United Arab Emirates and its Middle East neighbors, where they’ve helped the company build a $1.67 billion-a-year business serving up hot meals and cold snacks to locals and expats alike. That’s set up Talabat (which means orders in Arabic) to be the unlikely steward of what is set to be this year’s largest tech initial public offering.
Talabat is expected to raise $1.5 billion from investors in a listing on Dubai’s stock exchange which at the top end of the IPO book price of 44 cents per share would see the company valued at over $10.2 billion. That’s a steep discount from the earlier forecast of a $14.4 billion valuation from Emirates NBD, one of the banks on the IPO. Even so, it will rank as one of the top ten largest IPOs globally this year, according to financial deals platform Dealogic.
Public listings have picked up a bit from the doldrums of 2022 when United States-based IPOs plunged to a 32-year-low. Still, only a handful of deals around the world have surpassed what’s expected to happen for Talabat when it goes public on December 10. Those include cold storage and logistic giant Lineage’s $17.8 billion float and private equity group CVC’s $15 billion listing. Regardless, Talabat is poised to become this year’s largest tech IPO based on proceeds raised.
“The market is finally starting to come back and we have seen a bit of an uptick in listings,” Kat Kravtsov, Capital Markets Director at PwC UK told Forbes. “The expectation is that we will see more of that next year but that’s subject to things remaining as they are with no geopolitical or macro shocks.”
The listing of Talabat on the Dubai Financial Market is nearly double the size of some hotly tipped listings for U.S-based tech startups like Reddit, cloud data startup Rubrik, and AI chip designer Astera Labs. Reddit raised $748 million at a $5.6 billion valuation when it listed on the New York Stock Exchange though shares in the platform have since soared 181% since its March float thanks to deals to sell its content for AI training to Google and OpenAI.
Talabat is also expected to narrowly edge out another UberEats-style food and grocery delivery startup, Swiggy, which raised $1.3 billion at a $10.3 billion valuation when it went public earlier this month on the Bombay Stock Exchange.
Talabat’s listing is unusual because it’s essentially a spin out from parent company, Delivery Hero. The Berlin-based food delivery company snapped up Talabat back in 2016 in a string of deals that built a empire stretching across over 70 countries and 4 continents. Now grappling with tough competition and thinning profit margins, Delivery Hero is planning to sell the 15% stake in Talabat to pay down some of its more than $5.3 billion in debt.
Despite retaining a majority stake in Talabat, Delivery Hero only trades at a stock market value of $12 billion on the Frankfurt exchange. “Talabat is set to be worth almost as much as Delivery Hero,” said Clément Genelot, equity research VP with Bryan, Garnier & Co.
Investors snapped up the shares on offer for Talabat’s initial public offering within minutes after its book open, according to Bloomberg, but the business now faces tough competition from local rivals like Uber-backed Careem, Saudi’s Jahez but also China’s $126 billion food delivery giant Meituan which launched in the Middle East in September. With the cash raised from the IPO going back to its parent, Talabat will need to fend for itself against this growing pack of challengers.
The deal also caps out a “bonanza” of listings over the last few years on the Dubai, Abu Dhabi, and Riyadh stock exchanges. That has been driven by the privatization of state assets like Abu Dhabi’s state-owned oil company ADNOC but has since drawn local companies like grocery group Lulu and now foreign groups like Delivery Hero, according to Sameer Lakhani, managing director of Dubai-based asset manager Global Capital Partners. “I don’t want to use a negative word like hype but there’s definitely a lot of attention being paid to these capital markets,” he said.
