March 21 (Reuters) - U.S. organic food delivery service Sun Basket has hired banks for an initial public offering (IPO) that could come in the second half of the year, sources familiar with the situation said on Tuesday.
The IPO preparations come amid a boom in meal kit delivery companies, which deliver ingredients and accompanying recipes to subscribers’ doorsteps.
Sun Basket is working with investment banks Bank of America Corp and Jefferies LLC on the IPO, three sources said. The IPO could value the company between $500 million and $1 billion, the sources said.
The sources asked not to be identified because the deliberations are confidential. Bank of America and Jefferies declined to comment and Sun Basket could not be reached for comment.
The food delivery market, a new category that has grown in popularity over the past couple of years, includes HelloFresh in Europe and Chefs Plate in Canada. The largest player in the new space, Blue Apron, last year put plans to go public on hold, amidst increased competition.
The emerging market has become crowded as some companies struggle to cover their costs but still keep the deliveries at an attractive price for consumers.
Blue Apron is now aiming for an IPO as early as June, sources familiar with the situation said, asking not to be named because the plans are confidential. Blue Apron could not be reached for comment.
Sun Basket sets itself apart from its competition by focusing on organic and healthy food ingredients in packaging that can be recycled or composted.
Last month, Sun Basket announced it had raised about $15 million in funding Series C led by Sapphire Ventures, bringing total funding to $43 million. Other investors in the company include Baseline Ventures and Vulcan Capital, the investment firm of Microsoft co-founder Paul Allen.
It has said it will use the round to invest in a third distribution center in the U.S. Midwest, as it expands its geographic reach.
Sun Basket was founded in 2014 by technology executive Adam Zbar and San Francisco chef Justine Kelly. Its meals include gluten-free, paleo and vegetarian options. (Reporting by Liana Baker in San Francisco and Lauren Hirsch in New York; Additional reporting by Heather Sommerville in San Francisco; Editing by Lisa Shumaker)