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Instacart valued at $9.9 billion as IPO market rebounds

By Echo Wang

(Reuters) -Maplebear Inc, the parent of grocery delivery app Instacart, disclosed on Monday it fetched a $9.9 billion fully diluted valuation after pricing its initial public offering (IPO) at the top of its indicated range.

The valuation is a fraction of the $39 billion value that investors assigned to Instacart in a private fundraising round in March 2021, at the height of the COVID-19 pandemic which pushed consumers to order groceries at home.

The IPO was priced at $30 per share after the company marketed it with a range of $28 to $30 per share. That range had been revised upwards from $26 to $28 per share, following strong investor demand.

The IPO raised $660 million based on 22 million shares sold. The shares are scheduled to start trading on Nasdaq on Tuesday.

The offering is the last sign of the U.S IPO market's rebound, which was arid for most of this year and 2022, until SoftBank Group Corp's chip designer Arm floated on Nasdaq last week at a $54.5 billion fully diluted valuation.

Arm's fully diluted valuation has risen to $62 billion following three days of its shares trading.

Marketing automation company Klaviyo Inc on Monday increased its proposed IPO price range amid strong investor demand, targeting a fully diluted valuation of up to $9 billion when it debuts in the stock market later this week.

Some investors have agreed to buy up to $400 million worth of shares sold in Instacart's IPO, accounting for nearly two-thirds of the total proceeds.

These investors include Norges Bank Investment Management, a division of Norges Bank, and entities affiliated with venture capital firms TCV, Sequoia Capital, D1 Capital Partners and Valiant Capital Management. Sequoia and D1 Capital were existing Instacart shareholders.

PepsiCo agreed to buy $175 million in preferred convertible stock.

Instacart allows customers to order through its app and a "shopper" delivers the product in as little as 30 minutes. Its business has been more muted since the pandemic subsided, though it is trending up.

For the six months ended June 30, Instacart's revenue came in at $1.48 billion, up 31% from the same period last year.

Advertising and other revenue surged 24% to $406 million. It reported net income of $242 million during the six-month period, compared to a $74 million loss a year earlier. Boasting it is now profitable was key to Instacart attracting risk-averse investors.

Instacart has expanded its delivery business to non-grocery goods from sellers such as beauty product retailer Sephora, convenience store 7-Eleven and pharmacy chain CVS Health.

More than 1,400 national, regional and local retail banners that collectively represent more than 85% of the U.S. grocery market partner with Instacart, the company has said.

(Reporting by Echo Wang in New York, Editing by Rosalba O'Brien and Jamie Freed)