FRANKFURT (Reuters) - Online takeaway food delivery group Delivery Hero is expected to price its initial public offering (IPO) at the top end of the range, people close to the deal said, meaning the listing would raise 996 million euros ($1.13 billion).
Investors have been told that anyone offering below 25.50 euros a share risks being left empty handed, the sources said. The price range was set at 22.00 to 25.50 euros a share and trading is expected to start on Friday.
A successful listing for Delivery Hero is important for German e-commerce investor Rocket Internet, which holds a 35 percent stake in the firm and has failed to bring a company to market since 2014.
Meanwhile, New York-based Blue Apron Holdings, the online meal-kit company that is targeting similar investors to Delivery Hero, cut its valuation expectations for its IPO by a third amid concerns about the impact of Amazon (NASDAQ:AMZN).com's deal to buy Whole Foods.
A person close to the Delivery Hero IPO stressed the differences, arguing that Blue Apron's subscription-based business model was less attractive than that of Delivery Hero, which generates income by taking a commission on meal orders.
Rocket Internet's meal kit company HelloFresh has a similar business model to Blue Apron. HelloFresh is also preparing for a flotation as early as this autumn if the Delivery Hero listing is successful, sources have told Reuters.
Delivery Hero has said it would use the proceeds to pay off debt and for organic growth and acquisitions as it seeks to stave off rising competition. The listing is expected to value the company at up to 4.4 billion euros.
The online takeaway business has been booming in recent years, prompting listings of firms such as Britain's Just Eat (LON:JE) and the Netherlands' Takeaway.com, as well as the more recent entry of Amazon and Uber [UBER.UL].
However, online food delivery is seen as a "winner takes all" game as most users usually only download and use one app, meaning there is only enough space in most markets for one or two major players, underlining the need to build scale quickly.
"When people have decided for a certain website they will stick to that," Jitse Groen, chief executive of Takeaway.com which is fighting for market leadership with Delivery Hero in Germany, said last week.
Delivery Hero says it is market leader in 35 of the more than 40 countries it operates in Europe, the Middle East, North Africa, Latin America and Asia Pacific, and the total market it has access to is worth 72 billion euros.
($1 = 0.8832 euros)