Online takeaway food service Just Eat has announced plans to raise £100 million of fresh capital when it joins the stock market through a flotation which analysts said could value it between £700 million and £900 million.
That means the company, which handled 40 million meal orders last year, could be valued at more than 50 times its core earnings of £14.1 million.
Just Eat could also become the first initial public offering to take advantage of the new High Growth segment of the London Stock Exchange, which has been supported by the Government as a way to keep new hi-tech companies in this country by allowing them to sell fewer shares to get a listing.
Chief executive David Buttress, 38, said: “We qualify for both a premium listing or a High Growth one. We will decide nearer the time.”
Just Eat expects to issue a prospectus next month. Buttress would not give details but he and finance director Michael Wroe will become paper millionaires through the float. Private equity backers SM Trust, Index Ventures, Vitruvian Partners, Redpoint Ventures and Greylock Partners will all cash in some shares but also retain stakes.
Just Eat was founded in Denmark in 2001 and Burgess set up the UK operation in 2006. It now operates in another 11 countries and has plans to expand futher.
The Danes now order virtually half their takeaways online while in Britain it is only 20% and in most other countries less than 10%. “That gives a scale of the potential growth,” said Burgess. “At the moment our biggest competitor is the phone because that is still how most people order.”
Just Eat makes it money by charging restaurants an initial sign-up fee (£699 in the UK) which partly pays for the technology they need to process orders. It then charges an average 11 per cent commission on meals ordered through the system. That worked out at an average £2.11 per meal in 2013 up from £2 in 2013. Total revenues rose 62 per cent last year to £96.7 million.
Burgess pointed out that online orderers spend on average 30 per cent more than those using the phone. He said: “People browse the whole menu rather than each person in the family just shouting out their usual favourite dish so they tend to order more dishes.”
Just Eat has beefed up its board today with the arrival of BSkyB finance director Andrew Griffith and former Sainsbury’s director Gwyn Burr as non-executives.