HelloFresh aims for €1.5bn IPO valuation

Chibuike Nebeokike

The healthy meal-kit startup is looking to raise up to €311m to expand its business

HelloFresh, the meal-kit startup backed by Rocket Internet, is targeting a market valuation of as much as €1.5bn (£1.3 bn) in an initial public offering this week, the company said in a statement Sunday.

The company, which sells meal kits in 10 markets and remains unprofitable, set a price range of €9 to €11.50 a share. It’s looking to raise €243m to €311m to invest in expanding its business. The shares are expected to start trading in Frankfurt on 2 November.

HelloFresh chief executive Dominik Richter said the company wanted to “become the clear No 1 player on the US market in 2018.” The company, which has about 1.3 million active customers, is seeking to break even within the next 15 months, he said.

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The IPO will test investor appetite for food-delivery businesses just as Amazon’s purchase of Whole Foods threatens to upend the industry.

Rival Blue Apron, whose value has dropped by about half since its June public offering, cut 6 per cent of its workforce this week. Amazon itself has filed a trademark application for prepared food kits, and grocery chain Albertsons paid about $200m to buy meal-kit delivery company Plated.

HelloFresh has told investors that it will overtake Blue Apron in the US by the third or fourth quarter, according to an investor presentation seen by Bloomberg News.

HelloFresh generated sales of $167m in the US in the second quarter, up from $140m in the first three months of the year.

“We have huge momentum in the US market and are poised to overtake our biggest competitor in the near term,” HelloFresh wrote in its presentation for potential IPO investors. “We have out-executed Blue Apron across all dimensions.”

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HelloFresh had planned an IPO in 2015, after a funding round that valued it at €2.6bn, but shelved the stock sale amid concerns about investor demand and valuation in a volatile market, people familiar with the matter said at the time.

HelloFresh assembles ingredients into boxed meal kits and seeks to convince customers of the benefits of cooking at home.

Deutsche Bank, JPMorgan, Morgan Stanley, Berenberg and BNP Paribas are lead managers on the IPO.

Bloomberg

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