Shares of Delivery Hero sink as unit Talabat debuts on Dubai Market

Investing.com -- Shares of Delivery Hero fell over 10% on Tuesday as its unit, Talabat, made its debut on the Dubai Financial Market, raising $2 billion in its initial public offering. 

Despite its record-breaking size in both the tech sector and the GCC region this year, Talabat’s first day of trading was marked by a volatile performance that cast a shadow on its parent company’s valuation.

Talabat’s shares opened at Dhs1.70, exceeding the IPO price of Dhs1.60, which was set at the upper end of the marketed range. 

However, the initial gains quickly dissipated, and the stock slipped as much as 7.5% before settling 12..4% lower at Dhs1.5. 

The drop contrasted with the earlier momentum that saw Delivery Hero offload 4.7 billion shares last month at a higher price, boosting investor anticipation for Talabat's listing.

The IPO initially aimed to raise Dhs 5.6 billion by offering a 15% stake in Talabat. However, strong investor demand prompted Delivery Hero to increase the offer size to 20%. 

The enthusiasm was further underscored by commitments from cornerstone investors, including the UAE Strategic Investment Fund, Abu Dhabi Pension Fund, and Emirates International Investment Company, who collectively subscribed to shares worth as much as Dhs918 million.

Despite the strong demand during the IPO phase, Talabat’s debut performance weighed on Delivery Hero's shares, reflecting market uncertainty about the company’s near-term growth potential. 

The IPO gave Talabat a valuation of approximately Dhs37 billion, but the market's reaction on its first trading day hinted at investor caution amidst broader global economic pressures.

The listing, while a milestone for the region's tech sector, also flagged the challenges of sustaining momentum in a competitive industry.

Source: Investing.com