(Reuters) - Grocery delivery app Instacart said it had confidentially filed with the U.S. securities regulator to go public, not long after the pandemic darling was forced to slash its valuation by 40% following market turbulences and heated delivery wars.
The move by San Francisco-based Instacart comes at a time capital markets investors, hit by heavy losses from 2021 listings, are shunning initial public offerings (IPOs), and equity markets are bleeding in anticipation of further aggressive U.S. interest rate hikes to tame inflation.
A selloff in global markets following Russia's invasion of Ukraine in February and subsequent Western sanctions has made matters worse, forcing many companies to put their U.S. listing plans on hold. Eye-care company Bausch + Lomb last week priced its IPO well below its targeted range.
The tepid reception for recent listings underlines the challenges facing IPO-bound social media platform Reddit, U.S. software startup ServiceTitan and Mobileye (F:0ME), the self-driving car unit of Intel Corp (NASDAQ:INTC).
Instacart, which counts Andreessen Horowitz and Sequoia Capital among its investors, did not disclose any details on the size and timing of its market debut in the statement on Wednesday.
The grocery delivery firm is considering going public through either a direct listing or a traditional IPO, according to people familiar with the matter.
In direct listing, no shares are sold in advance, as is the case with IPOs. It also allows insiders to sell their shares immediately rather than be restricted for months, as is the case with IPOs.
Goldman Sachs (NYSE:GS) and JPMorgan (NYSE:JPM) are working on Instacart's offering, a person familiar with the talks told Reuters. The banks declined to comment on the matter.
SLASHED VALUATION
Instacart cut its valuation to $24 billion in March, a substantial drop from $39 billion a year earlier when the coronavirus pandemic was raging and doorstep delivery boomed.
The company has been under pressure from not only rival delivery upstarts, but also traditional retailers who are trying to grab market share in the space.
While retail giants Walmart (NYSE:WMT) Inc and Target Corp (NYSE:TGT) have been pouring money into fast delivery options, DoorDash recently acquired Finland-based rival Wolt to expand its footprint.
SoftBank-backed delivery startup GoPuff, which has been raising more capital, has tapped top U.S. banks to gear up for a U.S. IPO. It grew its valuation nearly four-fold in less than a year to $15 billion in July last year.