Local food delivery service provider Delivery Hero has sold $150m of shares in Colombia-based delivery service Rappi as food delivery services continue to grow around the world.
The divestment took place over a serious of transactions according to the company, which has retained a 7.9% stake in Rappi on a fully diluted basis, worth over $400m based on the $5.25bn valuation for its $500m series F round in July 2021. Delivery Hero said the $150m is close to the total amount of capital it has invested in Rappi.
Founded in 2015, Rappi operates a delivery app that operates across 250 cities in nine countries in Latin America, delivering groceries, medicine and consumer electronics in addition to food.
The online food delivery market has been thriving in Latin America in recent years, particularly since the onset of the covid-19 pandemic caused a spike in demand, growing by more than 30% between 2019 and 2020, according to Statista.
Rappi became the largest player in the region after internet and telecommunications group SoftBank invested a total of $1bn – $500m each from its Vision Fund and Innovation Fund – in early 2019. Since then, other players have been looking to find ways to emulate their model and stay competitive.
Delivery Hero made its initial investment in Rappi as part of a 2016 series B round sized at $52m according to a regulatory filing, having previously bought another Latin American food delivery platform, the Uruguay-based PedidosYa, in 2014.
The corporate subsequently acquired the Latin American operations of Spain-based on-demand delivery app Glovo for up to $271m in September 2020. It had sold a controlling stake in its Colombia-based subsidiary, Domicilios.com, to Brazil-based rival iFood five months earlier.
Delivery Hero said in a statement this week: “Delivery Hero will continue to exercise a disciplined capital allocation, and focus on investments that are in line with the group’s strategic vision. Over time, the remaining Rappi shares will be monetised at an appropriate valuation.”
T Rowe Price led Rappi’s $500m series F round, which also featured SoftBank, Baillie Gifford, Third Point, GIC and Octahedron, at a $5.25bn valuation in July 2021.
Delivery Hero committed $61m to a venture capital vehicle called DX Ventures in January 2021 to invest in on-demand services, food technology, artificial intelligence, financial technology, logistics and sustainable innovation.
DX Ventures took over management of Delivery Hero’s existing portfolio, which included Rappi, animal-free food producer Impossible Foods, food delivery service Zomato, ride hailing service Ola, food ordering app developer Ritual, biodegradable packaging manufacturer Bio-lutions and edible straw producer Wisefood.
Delivery Hero’s chief executive Niklas Oestberg said of the latest sale in a Twitter post: “We remain very bullish but we have always been committed to sell down assets which are no longer strategic to Delivery Hero’s vision.”
Image courtesy of Rappi.
