Niklas Östberg and Emmanuel Thomassin are anything but the typical executives of a German company.
The Swedish chief executive and French chief financial officer of food ordering group Delivery Hero, which will join Frankfurt’s flagship Dax 30 index on Monday, do not own cars, let alone employ chauffeurs.
Instead, they still cycle to the Berlin headquarters of the nine-year-old company, whose stratospheric rise has been supercharged by a huge increase in demand for takeaway meals during the Covid-19 pandemic.
But it is Delivery Hero’s balance sheet — unremarkable when compared with tech pioneers in the US or China — that really sets its apart from its new peers in Germany’s most important corporate club.
While the platform provider expects to break even in Europe this year, it is yet to make any money or indicate when it intends to become profitable; much less pay a dividend.
Despite almost doubling its revenue to €1.2bn and expanding its business in its core Asian market by approximately 170 per cent, Delivery Hero lost more than €660m last year.
And while many Dax companies make most of their revenues overseas, the group is alone in the index in having no operations in Germany, after selling its brands in the country to a Dutch competitor.
These disparities are all the more glaring given the circumstances that led to Delivery Hero’s promotion.
The door to the Dax was opened for Delivery Hero just three years after it went public by the collapse of Wirecard, which fell out of the index after one of the largest frauds in German history.
Following in the footsteps of the insolvent payments provider, which was once feted as the country’s most promising new tech company, is attracting unfortunate, if unfair, comparisons.
“While I have no indications whatsoever that [Delivery Hero] is another Wirecard in the making, I think [promotion to the Dax 30] is just a little too early,” said Christian Strenger, the former CEO of German asset manager DWS and a prominent corporate governance advocate who thinks sustained profitability should be a pre-requisite for inclusion in the index.
“It’s a question of maturity,” he added, saying the company’s supervisory board was too small and insufficiently equipped to manage global expansion, with little experience in emerging markets.
Delivery Hero’s inclusion in the Dax comes amid intense consolidation in its industry, with rivals including Just Eat and Uber — neither of which have reported an annual profit — battling to secure market share and hoover up smaller competitors.
Last year the company spent $4bn on acquiring South Korean food delivery group Woowa Brothers, and it plans to add Japan to the more than 40 countries in which its 800,000 riders now deliver food.
“Our focus right now is on growth,” Mr Thomassin told the Financial Times, emphasising that Germany needed to be more open to companies focused on expansion, rather than short-term profits.
“We will look at every [merger opportunity] in the world,” he added. “We need to grow, we need to scale in order to compete with these big giants from other countries.”
Mr Thomassin’s hope is that Germany’s conservative institutional shareholders will embrace the company’s strategy, and that its Dax membership will help “change the mentality” of major investors.
Michael Muders, a portfolio manager at Union Investment, which owns more than 2 per cent of Delivery Hero, is already convinced that it is “ripe for the Dax”.
“Size is the decisive advantage. The more customers, the more profitable the business model becomes,” he said, adding that “focusing on less developed, high-growth markets, despite initially high costs, is not a bad idea in the long run.”
Mr Thomassin, who balks at the idea of Delivery Hero still being called a start-up, is keen to point out that the way his company is run bears no relation to the kind of lax governance that led to Wirecard’s fall from grace.
“We don’t see any [comparison] . . . we don’t see any kind of connection,” he told the Financial Times, stressing that Delivery Hero had its quarterly reports independently audited before it was mandated to do so.
But he admitted that following Wirecard into the Dax would increase scrutiny of the company’s leadership, especially its two-member management board.
“We do have an extremely strong management team on the ground,” Mr Thomassin said, before adding that if investors sought reassurance in the form of a larger board, the company would consider it.
Mr Strenger, however, wants such considerations to be made before a company joins the “Bundesliga” of German indices.
The Deutsche Börse, which runs the Frankfurt stock exchange, should broaden its access criteria for admission to the Dax, he argued, and look beyond a company’s market value and the turnover of its shares, into the make-up of its boardroom.
“There must be a better composed set of rules,” he said, adding that “we need some time” to get over the Wirecard scandal.