Rocket Internet, a loss-making German incubator of online businesses, is aiming to raise up to €1.6 billion ($2.1 billion) next month in what will be the country’s biggest initial public sale of stock since the collapse of the dot.com economy nearly 15 years ago.
While the Berlin-based company set up by three German brothers has compiled an impressive list of international banks to manage the sale, including JP Morgan, Citigroup, Merrill Lynch, UBS and Morgan Stanley, the sale planned for October 9 is still seen as a risk by some investors.
In its prospectus published late Tuesday, Rocket said it lost €13.3 million in the first six months of this year, on sales of just €66 million. In 2013, Rocket made a net profit of €174 million, but only after spinning off a loss-making online shoe retailer, Zalando, whose results no longer were counted by Rocket.
While the company’s financial results are relatively meager, Rocket, which was founded by the Samwer brothers, has big hopes of raising big money. The company’s structure, which includes more than 400, mostly money-losing start-up businesses, is complex and not very transparent, some analysts said.
“Everyone has heard of Amazon in Britain, Germany and the United States. Rocket Internet, however, is not a brand,” said Jochen Reichert, a telecoms, Internet and media analyst at German bank Warburg in Hamburg. “It is a group of many brands with many businesses.”
In the slipstream of Chinese online e-commerce group Alibaba’s blockbuster $25 billion listing last week and cheap money amid record low interest rates in Europe and the United States, seven-year-old Rocket is hoping to tap investor demand for high returns and successful new online businesses.
A smooth start to the IPO appears assured, with several financial investors committed to buying shares.
In its prospectus, Rocket said it intends to “become the world’s largest Internet platform outside the United States and China.”