Another IPO Pulls Back: Rocket Holds HelloFresh Flotation

Germany’s Rocket Internet has decided to postpone the initial public offering for HelloFresh in yet another sign that public investors may not be willing to shell out the valuations assigned by private equity on tech firms.

A full stock prospectus and pricing range had been planned for yesterday (Nov. 9), but it seems the listing was pulled in the face of investors’ apparent lack of interest in backing the firm at the ~$2.8 billion valuation Rocket has placed on the firm.

Several investors and analysts told Financial Times that the company was not ready for a listing at a price acceptable to Rocket. A central issue is HelloFresh’s burn rate — the big bucks the food delivery service spends each year to attract new customers.

“I’d expect those losses to accelerate before it goes in the other direction,” said one investor.

“Absolutely no one I spoke to had any appetite for this deal,” Neil Campling, technology analyst for Aviate Global, noted.

The HelloFresh valuation is based on the sale of a 3 percent stake to Baillie Gifford, Edinburgh-based investors, for around $80 million in September. At the time, Rocket disclosed it had increased its holding in HelloFresh from 52 percent to 57 percent (the price was undisclosed).

“We continue to monitor market conditions. We are in absolutely no hurry to pursue an IPO,” HelloFresh noted in a statement.

Morgan Stanley and Goldman Sachs were lead advisers on the IPO. Both companies declined to comment.

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