German takeaways delivery platform Delivery Hero (DHER:ETR) has struck a €1.4 billion funding deal, addressing one of investors biggest concerns about the stock.
Delivery Hero is the global leader in the online takeaway marketplace, according to Berenberg, running platforms in 41 countries cross the Americas, Europe, Asia, Middle East and Africa. It is believed to be the number one platform in 35 of these markets.
Like its counterparts which are better-known to UK consumers, Deliveroo (ROO) and Just Eat Takeaway (JET), the company has been investing heavily for future growth and this has put pressure on profits.
Management’s comments in March suggested that 2022 losses will be materially larger than consensus had expected. Berenberg forecasts puts net losses at approximately €1.42 billion this year, although below 2021’s €1.58 billion.
FILLING THE FUNDING GAP
Delivery Hero had a convertible note maturing in January 2024, implying that extra capital would be needed. Today’s agreement fills that funding gap and sent shares in the Frankfurt-listed business up more than 10% to €46.06.
Proceeds, including a $825-million-term facility and €300 million term facility with a 5.25-year maturity, will be used to fuel further growth opportunities and provide general working capital. Delivery Hero said it would also enter a €375 million revolving credit facility with a consortium of banks.
‘While 2022 losses look set to be larger than we and consensus anticipated, we believe that the group can be EBITDA (earnings before interest, tax, depreciation and amortisation) positive in 2023,’ said Berenberg in a note on 21 March 2022.
Delivery Hero no longer operates in the UK after selling its operations, including the Hungryhouse brand, to Just Eat Takeaway in 2017.
