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Delivery Hero soars on debut as CEO predicts strong growth due to ‘very, very sticky’ customers

  • Delivery Hero appeared to whet investors' appetite on Friday as its shares surged 3 percent higher shortly after Friday's opening bell.
  • The loss-making German firm is set to trade at a premium in comparison to its peers, a move which had split opinion among analysts assessing its profitability.
  • The IPO is likely to provide a boost to Rocket Internet, a publicly-listed start-up factory which owns around a 35 percent stake in Delivery Hero.

Online food takeaway company Delivery Hero appeared to whet investors' appetite on Friday as its shares surged higher on the company's stock market debut.

"I'm glad we have had a good start but this is really about the long term… (it's) about the next 10 to 15 years to build a very good service," CEO Niklas Ostberg told CNBC on Friday.

The company's shares rose over 3 percent shortly after Friday's opening bell. The start-up had priced its initial public offering (IPO) at top end of the price range, in order to raise around 1 billion euros ($1.14 billion). On Wednesday, it placed almost 19 million new shares and 15 million existing shares on the Frankfurt Stock Exchange at $25.50 a share.

The loss-making German firm is set to trade at a premium in comparison to its peers, a move which had split opinion among analysts assessing its profitability. While some traders have pointed to Delivery Hero's larger global footprint as reason to justify its premium rate, others have warned the company could be vulnerable to sustaining heavy losses.

When asked how the firm planned to soothe investor concerns regarding the start-up's loss-making track record and premium rates, Ostberg replied, "I think we will continue to go for growth… we also see that our customers are very, very sticky. They stick with us for years and years and years and order more and more frequently and I think that's what investors really like."

'I don't think we need to worry about rivals'

The front desk at Delivery Hero's headquarters in Berlin, Germany.
Delivery Hero
The front desk at Delivery Hero's headquarters in Berlin, Germany.

The online food and delivery space has become increasingly competitive with new players such as Uber and Amazon entering the sector while existing rivals Deliveroo and Just Eat continue to expand. Delivery Hero, which was founded in 2011, operates in over 40 markets globally and has around 150,000 restaurants on its platform.

"As long as we have the best service in the market, the best product in the market… I don't think we have to worry a lot," Ostberg said, when asked whether Delivery Hero could compete with the likes of Uber and Amazon.

Delivery Hero is the fourth major online food delivery company to go public in recent years, following in the footsteps of Just Eat, Takeaway.com and GrubHub – which have all seen their share prices surge since listing.

The company has said it will use the funds raised from its listing to repay loans and to finance the growth and development of its business.

Acquisitions have been a key part of Delivery Hero's growth strategy. In 2015, it bought Talabat.com, an online food takeaway firm based in Kuwait, followed by Yemeksepeti in Turkey. The acquisition of Foodora followed shortly after.

The IPO is likely to provide a boost to Rocket Internet, a publicly-listed start-up factory which owns around a 35 percent stake in Delivery Hero. Rocket Internet invests in start-ups and has a number of companies in its portfolio, but has struggled to turn a profit. While Delivery Hero's shares moved higher, Rocket Internet was under pressure in early morning deals.

—CNBC's Arjun Kharpal contributed to this report.