Naspers, the South African media and internet giant, has upped its stake in Delivery Hero, the Berlin based food-delivery giant that went public earlier this year and has a market cap of $6.8 billion. Naspers has acquired another 13 percent of the company, 22.4 million shares, equivalent to about €660 million ($775 million), from Rocket Internet. Naspers now owns 26.3 percent of the company.
The move is notable for a few reasons.
The food delivery space is one of the more legacy categories of e-commerce services, but in recent years it’s been heating up as a new wave of competitors have hit the market.
They include Deliveroo, which this weekend reported that it had raised $385 million at a $2 billion+ valuation — timed to come out just ahead of Delivery Hero’s half-year earnings report. And both Amazon and Uber have been working hard to use their own logistics networks to build out their own food delivery businesses as alternative revenue streams to their core operations. One market where Delivery Hero does not operate (for now at least) is the U.S., so companies like Seamless/GrubHub have less of an impact.
In that context, Naspers is clearly hoping to take a bigger role in this growing market, and potentially leverage some of its other investments, which include classified advertising and payment and other online financial services.
“Delivery Hero is already the leading online food ordering and delivery marketplace in most of the countries in which it operates and our increased investment demonstrates our confidence in the long-term prospects for the company,” said Bob van Dijk, CEO of Naspers, in a statement. “The food delivery sector is still underpenetrated and growing rapidly across the world. Many markets have experienced significant traction already, but we believe the potential is far greater in high-growth markets than that observed in the West.”
The deal also shows how Rocket Internet continues to divest and simplify its vast network of investments around the world across a wide range of e-commerce and other online properties. While Rocket and Delivery Hero actually started out as rivals, in 2015 a truce of sorts was called as the two shuffled around their various regional operations and Rocket invested $586 million into Delivery Hero.
On Naspers’ side, it’s a sign of how the company continues to consolidate and take firmer holds on properties where it invests — in this case, adding to the €387 million stake it took in the company earlier this year.
“We’ve known the Naspers management team for a couple of years and built very close and trustful relationships,” said Niklas Östberg, CEO of Delivery Hero, in a statement. “They came in as a long-term shareholder, committed to Delivery Hero, committed to the vision and values of our company and management team. We are excited about their willingness to increase their stake as they have seen our business develop.”
Delivery Hero itself earlier this week reported results for the first half of its financial year that showed that it’s still growing at a decent pace. The company posted a 66 percent increase in revenues to €246.5 million ($290 million), but it is still operating at a loss, with EBITDA at -€45.3 million ($53 million). The company is projecting to break even in 2018.