Rocket Internet joins e-commerce listings rush with 5 billion euros float plan

September 10, 2014
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By Emma Thomasson

BERLIN (Reuters) – German venture capital group Rocket Internet, which has launched dozens of online start-ups, has set out plans for a stock market listing that could value the company at 5 billion euros ($6.5 billion) as it rides a wave of e-commerce flotations.

Wednesday’s announcement of plans to raise about 750 million euros through a share sale comes just a week after Zalando, Europe’s biggest online fashion player that Rocket itself helped launch, also announced its intention to float, meaning the two companies will be competing for investors at the same time.

Berlin-based Rocket said in a statement the offer would consist solely of new shares, proceeds of which it would use to finance growth through launching new businesses and providing more capital to its existing companies.

A source with knowledge of the plans said Rocket planned to list a stake of about 15 percent, giving the group a total value of about 5 billion euros and making billionaires of the three Samwer brothers who own 52.3 percent of the Rocket stock – as well as holdings in Zalando.

A flurry of e-commerce flotations is expected to be capped this month by China’s Alibaba, whose initial public offering is expected to be the biggest ever technology listing, surpassing Facebook Inc’s $16 billion listing in 2012.

Rocket Internet wants to replicate the success of Amazon.com Inc and Alibaba in markets the U.S. and Chinese groups have yet to dominate, such as Africa, Latin America, Russia and other parts of Asia.

Founded in 2007 by brothers Oliver, Alexander and Marc Samwer, Rocket is active in more than 100 countries, making revenue of $1 billion in 2013 via e-commerce and online marketplaces for everything from taxis to meal deliveries.

“We believe the Internet will play a transformational role in people’s lives everywhere, particularly in emerging markets,” said Oliver Samwer, chief executive. “Taking our company public is the next step in our journey to build the world’s leading Internet platform outside of the United States and China.”

BIGGEST IN EUROPE

The Rocket and Zalando listings are the biggest technology offerings in Germany since the bursting of the dot-com bubble more than a decade ago and the Rocket flotation would be the biggest in Europe since Russia’s Yandex in 2011.

Rocket is expected by analysts to appeal more to technology or emerging market funds, and Zalando to those looking for exposure to booming e-commerce in Europe. Zalando hopes to raise more than 500 million euros by listing a stake of 10-11 percent.

Shares in Sweden’s Kinnevik, a major investor in Rocket and Zalando, were up 0.8 percent at 0811 GMT compared with a weaker local market.

“Rocket has an extremely interesting business model – they are taking quite simple business models which work well in Europe and launching them in emerging markets,” said analyst Bjorn Gustafsson, analyst at brokerage Kepler Cheuvreux.

Kinnevik Chief Executive Lorenzo Grabau said the Rocket partnership had created substantial value for his shareholders.

“Rocket Internet has shown tremendous growth over the past years and has proven that its operating platform is a unique basis to consistently create and scale market-leading franchises across the five continents,” he said.

The Samwer brothers have gained notoriety for cloning businesses pioneered in Silicon Valley in new markets – most notably German online auction site Alando, which they sold to eBay Inc, the site it was modelled on; and Amazon Zappos-copy Zalando.

    Rocket says it can launch a company within 100 days by drawing on expertise in areas like finance, communications, marketing and business intelligence at its Berlin head office, helping it start an average of three to six new firms a year.

Rocket said it planned to apply for its shares to be listed on the Frankfurt Stock Exchange via the “entry standard” – which requires less detailed financial information of listed companies than the “general” or “prime” standard that Rocket said it hoped to move to within the next 18 to 24 months.

Rocket has only released limited financial details so far. Its top 10 e-commerce ventures – including fashion sites Lamoda in Russia and Dafiti in Brazil, plus online furniture stores Home24 and Westwing – together made sales of 743 million euros in 2013 and had an operating loss of 431.6 million, according to figures from Kinnevik.

Last week, Rocket and Kinnevik announced plans to combine Rocket’s five emerging market online fashion start-ups to create a new group worth 2.7 billion euros, prompting speculation that they might ultimately spin out that business.

Rocket said its six main shareholders – including Kinnevik and the fund of the Samwer brothers – would sign lock-up commitments not to sell their shares for at least 12 months.

Berenberg, JP Morgan and Morgan Stanley are joint coordinators of the offer, while BofA Merrill Lynch, Citigroup and UBS are joint bookrunners.

(1 US dollar = 0.7735 euro)

(Additional reporting by Mia Shanley in Stockholm and Kathrin Jones in Frankfurt; Editing by David Holmes)

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