Instacart's long-awaited U.S. IPO valuation targets as high as $9.3B

An Instacart employee walks to her car outside a Safeway grocery store in Arizona.

Instacart employee Eric Cohn, 34, wears a respirator mask as he walks to his car outside a Safeway grocery store to help protect himself and slow down the spread of the coronavirus on April 4, 2020 in Tucson, Arizona, USA. Spread of viral disease (COVID-19).

Instacart on Monday set a fully diluted valuation of up to $9.3 billion in its highly anticipated U.S. initial public offering, well below the price it paid for in its last funding round.

The company said in a regulatory filing that it plans to raise up to $616 million by offering 22 million shares priced between $26 and $28 each, along with some investors looking to reduce their stakes.

In an unusual move, cornerstone investors agreed to buy up to $400 million worth of shares sold in the offering, which will account for nearly two-thirds of the total proceeds at the upper end of the price range.

The investors include Norges Bank Investment Management, a division of Norges Bank, and entities affiliated with venture capital firm TCV, Sequoia Capital, D1 Capital Partners and Valiant Capital Management. Sequoia Capital and D1 Capital are current backers of Instacart.

“Instacart has positioned itself as an interesting IPO that will be more comparable to other venture-backed companies than other listings in 2023,” said Kyle Stanley, chief venture capital analyst at PitchBook.

The San Francisco-based company was valued at $39 billion after its last funding round more than two years ago, when easy money helped several startups reach sky-high valuations.

As the Federal Reserve raises borrowing costs to curb inflation, many ambitious startups are having to raise money at lower valuations.

Instacart also had to cut its internal valuation to $10 billion on its way to a Nasdaq listing in December.

The company is expected to go public in September, nearly three years after Reuters reported it had chosen Goldman Sachs to lay the groundwork for its IPO.

Instacart will join SoftBank chip designer Arm and marketing automation company Klaviyo, which are also preparing to go public in September.

If successful, the listings could contribute to an initial recovery in the U.S. IPO market amid growing expectations that the Federal Reserve will pause interest rate hikes.

The rush to market has seen new listings stalled for much of the past two years as Russia invaded Ukraine and soaring borrowing costs.

Instacart filed for an IPO under the name “Maplebear,” which is the name the company was registered under. Its shares are expected to trade on Nasdaq under the symbol “CART.”

Instacart said PepsiCo has agreed to purchase $175 million of preferred convertible shares, adding that common stock investors will see their ownership interests diluted immediately following the offering.

Founded in 2012, Instacart allows customers to order through its app, and “shoppers” deliver products in as little as 30 minutes.

The company has expanded delivery into non-grocery items from sellers such as beauty retailer Sephora, convenience store 7-Eleven and pharmacy chain CVS Health.

The company said more than 1,400 national, regional and local retail brands work with Instacart, which together account for more than 85% of the U.S. grocery market.

Goldman Sachs and JPMorgan Chase are the lead underwriters.

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