HelloFresh SE , the unprofitable meal-kit startup owned by Rocket Internet SE, plans to sell as much as 300 million euros ($353 million) of stock in an initial public offering to finance expansion even after U.S. rival Blue Apron Holdings Inc. flopped in its IPO.
HelloFresh will sell new shares to raise 250 million euros to 300 million euros on the Frankfurt Stock Exchange, the company said in a statement Tuesday. HelloFresh has shown a “strong track record” of improving profit margins and aims to break even in the next 15 months, it said.
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The Berlin-based company and its advisers have been meeting investors to gauge demand for the listing, which could value the business at 1.5 billion euros to 2 billion euros ($2.3 billion), according to people familiar with the matter.
Chief Executive Officer Dominik Richter will have to prove to investors that HelloFresh isn’t the next Blue Apron, which has lost almost half its value since going public in June. The U.S. company has struggled with higher costs and a decline in customers, just as Amazon.com Inc.’s purchase of Whole Foods Market Inc. highlighted the growing competition in the food business.
Founded in 2011, HelloFresh sells meal kits in 10 countries including the U.S. and remains unprofitable. Richter says his company is performing better than competitors, citing faster growth, better profitability and market-share gains. The company in September reported a 53 percent sales growth from a year earlier and signed up 90,000 accounts during the second quarter.
“The public listing marks the next logical step to further expand our business, to secure our position as the leading global player and to pursue our long-term growth strategy,” Richter said in the statement.
Companies ranging from U.K. automotive service-station operator MRH GB Ltd. to Spanish-German waste recycler Befesa SA are lining up IPOs in Europe amid strong investor appetite for the sales. Issuers in the region have priced almost $45 billion of sales this year, compared with about $32 billion in the same period in 2016, according to data compiled by Bloomberg.
Bakkavor Group Plc, a provider of fresh prepared food, is also planning an initial public offering in London to raise about 100 million pounds ($132 million), it said in a statement Tuesday.
Rocket Internet owns 53 percent of HelloFresh and in June backed a successful IPO by food delivery company Delivery Hero AG. While Delivery Hero mostly processes orders for restaurants that deliver, HelloFresh assembles ingredients into boxed meal kits and seeks to convince customers of the benefits of cooking at home — a more complex business model.
Shares of Rocket Internet increased 1.5 percent to 22.06 euros at 8:09 in Frankfurt. A spokeswoman did not respond to a request for comment.
Berenberg, BNP Paribas, Deutsche Bank, J.P. Morgan and Morgan Stanley are managing the sale, along with Rabobank.