Just Eat is reportedly eyeing a flotation in 2014 that would value the firm at between £700m and £900m and be the biggest IPO to break out of Tech City in a London-listing.
This puts the firm, which offers customers a simple takeaway food ordering system online, at 70 to 90 times its projected pre-tax earnings for 2013, according to the Financial Times which had been tipped off about an impending IPO.
Citing a quarterly report from Just Eat that is not in the public domain, the FT said the firm's earnings before interest, tax, depreciation and amortisation (ebitda) looked to be £10m for 2013. Revenue had picked up from £59.8m in 2012 to £100m. It made an operating loss of £9.6m in 2012.
The IPO has been pencilled in for April or May, with JPMorgan and Goldman Sachs as advisers. As little as 10% of Just Eat may be made publicly available investors.
While the valuation looks expensive, other web firms are trading at high multiples of earnings as investors play the long game and anticipate significant future growth. For example, online clothing retailer Asos is trading at over 70 times earnings.
Just Eat is funded by five main private equity firms – Index Ventures, Greylock Partners, Redpoint Ventures; SM Trust; and Vitruvian Partners – as well as staff and other private investors.
It was founded in 2001 in Denmark by five entrepreneurs. In 2006 they had moved the business to Britain and now the business operates across four continents with 5.5 million active users.
There looks to be decent growth potential for the firm. Just 10% of the world's takeaway orders are currently made online. As consumers become more tech-savvy, this is certain to rise.
Just Eat makes its money by charging the 40,000 restaurants currently using its website to secure custom a commission fee of 10-11% per order.
An IPO has been speculated about for some time, but the rumours are looking likely to become reality now that advisers have been appointed.
Just Eat did not reply to IBTimes UK's request for comment.