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Appetise, a national UK online takeaway food delivery marketplace plans to list on the ASX in November 2017

September 27, 2017 Business News No Comments Email Email

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— Appetise is a national UK online takeaway food delivery marketplace.
— Just opened an A$4.8 million to A$6.8 million ASX IPO.
— Chaired by Simon Smith, a former CEO of eBay Australia.
— Keith Edelman, a former CEO of Arsenal, is on the board.
— Established platform with 400+ restaurants and 90,000+ registered users.
— Offering a better value-for-money proposition for restaurants and consumers than the limited number of larger competitors.
— UK takeaway market $10.7 billion currently and expected to grow to $12.8 billion by 2020.
— The space has attracted substantial investment and M&A.

Appetise (Holdings) Ltd (“Appetise” or the “Company”), an online marketplace for takeaway and delivery restaurants, operating nationwide in the UK, has opened an initial public offering of its shares and plans to list on the ASX in November 2017. Appetise is a “pure play” marketplace intermediary between restaurants and consumers (similar to Menulog in Australia in terms of its business model) – it does not provide delivery or logistics services, making its business model scalable and low capex.

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The global market for takeaway food is A$124 billion annually. The UK market is the largest in Europe, worth A$10.7 billion currently, and projected to grow to A$12.8 billion by 2020. Telephone ordering still accounts for a majority of that market; however, online ordering has experienced substantial growth and investment recently.

Appetise is an established platform with an existing customer base and restaurant partners in place. Appetise has grown to have approx. 90,000 registered users and approximately 400 restaurants on its platform and had a gross order volume of approx. A$500,000 (with net revenues of approx. A$50,000) in the year to 31 March 2017.

Following a substantial investment by the US institutional investor behind the successful ASX-listed DroneShield (ASX: DRO) and an introduction of a new, high-powered board and management team, Appetise is now raising capital in an ASX IPO as it seeks to expand its restaurant and consumer reach, grow its revenues and achieve profitability.

The online food ordering sector in the UK and internationally has undergone extensive consolidation at substantial valuations over recent years, to a point where there are now only two large players among the pure play marketplaces in the UK. There have been over 15 recent acquisitions and capital raisings in the space. For instance, Just Eat (the largest UK player) announced an agreement to acquire Hungry House (the second largest UK player) in December 2016; and in May 2015 Just Eat acquired the Australian Menulog.

In the public markets, there have been several IPOs of online takeaway food marketplaces, and there are now four publicly-traded companies in the space in the US and Europe. These are JustEat, GrubHub, Delivery Hero and Until Appetise joins the ASX, Australian investors are unable to get exposure in this rapidly growing industry through any of the ASX-listed companies. The closest ASX-listed company to this industry is GetSwift (ASX: GSW), which provides dispatch/delivery management software.

The consolidation in the UK market has created a market dynamic where the largest player in the sector charges restaurants a joining fee of up to Ł699 and commissions of up to 14% on orders placed through its platform. It also charges customers a 50 pence card fee on all transactions. These fees can make it more expensive for customers to order through an online platform than it would be if they ordered directly from the restaurant.

Appetise brings value back to restaurants and customers via its strategy of eliminating joining fees for restaurants and card fees for consumers, and charging a commission rate of up to 10% (as compared to up to 14% for the larger competitors) on orders placed through its platform. Appetise also offers a generous loyalty scheme for regular customers, making it cheaper for consumers to order through Appetise than ordering directly from the restaurants. Further, Appetise enables consumers to make an educated choice by providing them with the ability to search restaurants by hygiene rating, something that its competitors are not offering consumers. All of these initiatives are designed to bring genuine choice and value back to restaurants and customers and allow them to share more equally in the benefits of the online food ordering marketplace.

Appetise’s team includes:

— Simon Smith (Chairman) who was previously CEO of eBay Australia.
— Keith Edelman (Non-Executive Director) who is currently a Non-Executive Director of Revolution Bars Group Plc (LSE: RBG) and SuperGroup Plc (LSE: SGP) and was previously the Managing Director of Arsenal Holdings Plc (OFEX: AFC).
— Konstantine Karampatsos (CEO), formerly Commercial Director of and Head of e-commerce at (acquired by Rakuten, one of the world’s largest retailers and e-tailers, in 2011). At, Konstantine designed and launched the marketplace model, leading a team of 20 people he recruited and managing 2,000 merchants for the marketplace. Prior to, Konstantine worked in marketplace sales at, and was Sales Director at and a mergers and acquisitions analyst at Royal Dutch Shell.

The Company’s IPO assumes a pre-money valuation of A$9 million. Once listed, the Company will have a market capitalisation of A$15.8 million (based on the IPO issue price of $0.20 each and the maximum subscription of A$6.8 million being raised).

A majority of the funds raised from the IPO will be used to expand the marketing effort and sales staff, and continue to develop and refine the Company’s software platform.

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