Talabat’s IPO Faces Market Challenges Despite Record-Breaking Offering
Talabat Holding Plc experienced a bumpy start after its highly anticipated $2 billion initial public offering (IPO) in Dubai. The food delivery giant, a subsidiary of Delivery Hero SE, saw its shares drop 6.9% to 1.49 dirhams ($0.41) by the close of trading on Tuesday, despite an initial surge of up to 7.5% earlier in the day.
The IPO, priced at 1.60 dirhams per share at the top end of its marketed range, marked the largest tech sector listing in the Gulf region this year. However, Delivery Hero’s own shares dropped as much as 12% in Frankfurt, adding to concerns about the valuation.
Market Response and Valuation Concerns
While Talabat’s IPO generated significant interest and included an upsized 20% stake due to strong demand from anchor investors, some market experts highlighted concerns about its steep valuation. Mohammed Ali Yasin, CEO of Oracle Financial Consultancy and Investments, noted that the IPO was priced with a price-to-earnings ratio of nearly 28 times, far above the Dubai Financial Market General Index, which trades at nine times forward earnings.
“The valuation of the business was on the higher side compared to global peers,” said Ashish Marwah, CIO of Neovision Wealth Management. “I’d prefer to wait a few trading sessions to see if the trend stabilizes.”
Mixed Performance in Regional IPOs
The Middle East has been a hotspot for IPO activity in 2024, with companies raising over $12 billion. Despite this, some high-profile listings have delivered mixed results. For instance, Lulu Retail Holdings Plc’s shares remained flat during their debut in Abu Dhabi, while Oman’s OQ Exploration & Production fell by 8% on its first day of trading, despite being heavily oversubscribed.
Market liquidity has also been a concern. According to Yasin, institutional and professional investors have been responsible for the majority of sell-offs in Talabat’s case, as retail investors were allocated just 5% of the IPO.
Talabat’s Market Position
Despite the challenging debut, Talabat’s market capitalization of 34.7 billion dirhams ($9.4 billion) remains close to Delivery Hero’s €9.2 billion ($9.7 billion) valuation. The company’s operations span eight countries, including the UAE, Kuwait, Oman, Qatar, Egypt, Jordan, Iraq, and Bahrain.
Talabat has solidified its regional presence through strategic acquisitions, including Zomato’s food delivery business in the UAE in 2019 and the online grocery platform InstaShop in 2020.
Outlook for the Gulf’s IPO Market
The Gulf region continues to attract diverse IPOs across sectors such as retail, healthcare, and financial services, driven by population growth and government efforts to diversify capital markets. Consumer-facing businesses in hubs like Dubai have particularly benefited from this momentum.
For Talabat, the coming weeks will be critical in determining whether its IPO can gain traction and stabilize amid broader market volatility.
Behind the Deal
The Talabat IPO was supported by an array of financial institutions, including Emirates NBD Capital PSC, JPMorgan Securities, and Morgan Stanley as joint global coordinators. Other joint bookrunners included Barclays, First Abu Dhabi Bank, Goldman Sachs, EFG-Hermes, and UniCredit, ensuring robust global participation in the offering.