Employees work at the Rocket Internet headquarters in Berlin. Rocket’s plan to raise about €750mn by selling new shares pits it against Europe’s biggest online fashion firm Zalando and China’s Alibaba in the quest for investors this month.

Reuters

Berlin

German venture capital firm Rocket Internet unveiled plans for a stock market listing that could value the company behind dozens of online start-ups at $6.5bn, riding a wave of e-commerce flotations.

Rocket’s announcement yesterday of plans to raise about €750mn by selling new shares pits it against Europe’s biggest online fashion firm Zalando and China’s Alibaba in the quest for investors this month.

Alibaba’s initial public offering is expected to cap the flurry as the biggest technology flotation ever, surpassing Facebook’s $16bn listing in 2012, while Zalando’s share sale would value it at about $5.8bn.

Berlin-based Rocket said in a statement its offer would consist solely of new shares and it would use the proceeds to fund growth by 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%, giving the group a total value of some €5bn ($6.5bn).

Rocket Internet wants to replicate the success of Amazon.com Inc and Alibaba in markets the US and Chinese e-commerce 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, with sales of $1bn 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, adding he was not concerned about competing with Alibaba for attention. “Ultimately we are a very unique story ... We believe investors will value the exposure that they can get through us to those fastest growing markets.”

The Samwer brothers own 52.3% of the existing Rocket stock and hold 17% of Zalando, a company Rocket helped launch, so the two listings would make thembnaires. The Rocket businesses have succeeded in attracting a raft of high-profile investors – most recently securing €768mn from German service provider United Internet AG and Philippine Long Distance Telephone Company.

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 500mn euros by listing a stake of 10-11%.

“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.

The Samwer brothers have gained notoriety for cloning businesses pioneered in Silicon Valley in new markets, such as a German online auction site which they sold to eBay Inc and Zalando, inspired by Amazon-owned fashion site Zappos.

Rocket says it can launch a company within 100 days by drawing on expertise in areas such as 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 plans to apply to list its shares in Frankfurt via the “entry standard”, which requires less detailed financial information than the “general” or “prime” standard that Rocket hopes to reach within 18-24 months.

Rocket has released limited financial details so far. Its top 10 e-commerce ventures – including fashion sites such as Lamoda in Russia and online furniture stores Home24 – had sales of €743mn in 2013 and an operating loss of €431.6mn, according to figures from major investor Kinnevik.

Samwer said Rocket would publish more figures with its listing prospectus and would report results on a half-yearly basis in future, but said profits were not an immediate goal.

“We are in a high growth phase and investing for growth ... we do have a clear path to long-term profitability,” he said.

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