Talabat’s $1.5 Billion IPO Sells Out Soon After Books Open

(Bloomberg) — Delivery Hero SE’s Middle East unit had demand for all shares in its $1.5 billion Dubai initial public offering minutes after subscriptions opened, in the latest sign of robust demand for regional deals.

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Books for Talabat’s IPO were covered throughout the price range of 1.50 dirhams ($0.41) to 1.60 dirhams, according to the terms of the deal seen by Bloomberg News. Its parent firm is offering a 15% stake, or 3.49 billion shares.

The top end implies a valuation of $10.2 billion for Talabat, slightly lower than Delivery Hero’s $11 billion market capitalization. It’s also below some estimates — Emirates NBD, one of the banks on the IPO, previously said that Talabat could be worth up to $14.4 billion, while Bloomberg Intelligence estimated an enterprise value of as much as $12 billion.

“It may reflect eagerness to preserve the post-IPO price performance as Delivery Hero’s goal is dual here: cash in money to delever its balance sheet, and force the market revise up its sum-of-the-parts assumption,” said Clement Genelot, an equity analyst at Bryan Garnier.

The valuation range pointed to a discount of close to 40% compared to non-European peers — higher than the 25% to 30% Genelot’s firm expected. The more Talabat shares perform over the coming weeks, the more investors and analysts will be forced to revise their valuation approach of Delivery Hero, he said.

The German firm’s shares were up about 0.5% Tuesday afternoon in Germany.

The Talabat deal comes soon after disappointing starts for two large Gulf deals. Hypermarket chain Lulu Retail raised $1.7 billion in an Abu Dhabi offering last month soon after a $2 billion IPO from a unit of Oman’s state energy company. Lulu ended the day flat, and the Omani firm closed 8% below its offer price.

The final price for Talabat’s offer will be announced Nov. 29. Its shares are set to start trading on Dec. 10.

(Updates with details on valuation and analyst comments)