Saudi Arabia-based food delivery firm Jahez has hired the local unit of British multinational bank HSBC to help manage what could be the first listing by a tech startup in the kingdom.
Jahez International Company for Information Technology picked HSBC Saudi Arabia as the sole financial adviser and global coordinator for its potential IPO (initial public offering) on Nomu, the Saudi stock exchange’s secondary market, which imposes lighter listing requirements to encourage smaller businesses and startups to raise equity.
Founded in 2016, the homegrown firm serves around 2 million customers in the kingdom, and processed about 20 million restaurant orders through its app in 2020, it said, without disclosing details about its potential valuation. It closed a $36.5 million funding round last year.
“We will continue to expand our platform to tap into new growth opportunities offered by rapid, technology-enabled changes in consumer behavior, both in Saudi Arabia and in the wider region,” said Ghassab Al Mandeel, chief executive officer at Jahez.
Food delivery companies have been flooded with cash from investors betting the pandemic brought a permanent shift in shopper habits. Startups including Turkish retail delivery app Getir and Berlin-based grocery delivery app Gorillas have rapidly hit billion-dollar valuations. In the UK, Deliveroo raised $2.1 billion in its listing on March 31 but then saw its shares plunge more than 30 percent in their debut.
Saudi grocery delivery app Nana also raised $18 million last year, tapping investors including venture capital fund STV and Middle East Venture Partners to expand across the Middle East.
Jahez is the biggest locally owned player in the kingdom, competing with the likes of Uber-owned Careem Now and Delivery Hero-backed Hunger Station and Talabat. Jahez has also been expanding in other areas such as last-mile logistics and cloud kitchens.
The IPO could add to a string of listings in Saudi Arabia, where companies are taking advantage of investors’ demand for new offerings and as state entities look to raise money to bankroll efforts to diversify the economy. Saudi Arabia’s consumer spending is recovering, with its non-oil economy, the main engine of job creation, rebounding in the first quarter to pre-pandemic levels following a recession.
Jahez is of the opinion that “an improving Saudi economy and the resulting rise in employment and disposable income” will fuel further food and eCommerce spending.”