Rocket Internet AG, the Berlin-based start-up business incubator specializing in e-commerce, has faced its share of criticism since its founding in 2007. Some have taken the firm to task for copying the business models of rivals while others have pondered which of its many investments are really generating a profit.
But there were nothing but smiling faces at the company’s headquarters last week after Philippines-based telecommunications giant Long Distance Telephone Co. bought 10 percent of Rocket’s shares for €330 million ($442.6 million). The investment values Rocket at €3.3 billion.
Despite the new investment, it is an open secret that Rocket plans to go public. Speculation in financial circles was that the increase in private capital should be seen as a sign to potential investors that the company is an attractive investment even without an initial public offering. Rocket is said to be aiming for a stock sale when its valuation is closer to €5 billion, but it could go forward if there were a strategic investment. The base line has been set with the most recent investment.
Despite the new investment, it is an open secret that Rocket plans to go public.
The deal represents a substantial leap in the value of the Berlin firm, whose 70 start-ups include Westwing, a home design portal; Home24, an online furniture retailer; and Hello Fresh, which delivers meal preparations in a box. The start-ups are active in some 100 countries.
The holding company of Len Blavatnik, a London-based investor originally from Ukraine, came aboard last year reportedly for significantly less money for a 10 percent stake, when online fashion retailer Zalando AG was still among Rocket’s holdings.
The fact that Rocket is now worth even more without Zalando is seen as a confirmation that international investors like the Philippine firm believe in the company’s business model.
Rocket is hoping not only for money, but also for a practical increase in valuation from the newest major stockholder. The Philippine firm is considered one of the leading providers of mobile payment solutions in Internet commerce, particularly in developing countries. Rocket wants to be part of the emerging markets Long Distance Telephone serves while also benefitting from the company’s expertise in Internet payments.
“One of the leading retailers is joining up with one of the leading providers of payment solutions to create a champion,” a Rocket spokesperson said.
Long Distance Telephone is now the fourth shareholder in Rocket Internet after the European Founders Funds of the brothers Marc, Oliver and Alexander Samwer (58.7 percent), the Swedish investment firm Kinnevik (21.5 percent) and Access Industries (9.8 percent), the holding company of Mr. Blavatnik.