Both companies want to announce plans for initial public offerings
(IPO) in the first half of September, meaning that the two biggest
Internet listings in Germany for more than a decade could take place
concurrently, the banking sources told Reuters.
"At the moment, the IPO market is still very receptive, but
political uncertainties remain," said a banker involved in one of
the deals, referring to the conflicts in Ukraine and Iraq. "So
everyone is striving to tap the market as soon as possible."
Zalando, which is holding a media presentation on its business next
Thursday, and Rocket Internet are likely to list stakes of around 15
percent each by selling new shares, separate sources have previously
Larger offers would risk diluting existing shareholders too much,
something they want to avoid, bankers said. One banker estimated
Zalando was seeking to raise around 900 million euros ($1.2 billion)
and Rocket Internet about 800 million euros.
The companies declined to comment.
"If they really run in parallel, that would be very unfortunate,"
said a banker involved in the plans, voicing concern that the firms
may have to compete for investment.
However, another source with knowledge of the plans said he expected
the two companies to attract different kinds of investors, with
Rocket Internet appealing more to technology or emerging market
funds and Zalando to those looking for exposure to booming
e-commerce in Europe.
Rocket Internet plans to use the cash raised in its listing to allow
it to hold on to big stakes in the companies it helps create, one
Buoyant capital markets have encouraged a flurry of e-commerce
flotations this year, with Chinese juggernaut Alibaba <IPO-ALIB.N>
set to list soon, even though a recent sell-off in high-flying tech
stocks has dampened investor appetite.
In the run-up to its listing, Alibaba has been expected to raise
more than $15 billion, which would make it one of the biggest tech
IPOs in history and close to Facebook's <FB.O> $16 billion initial
offering in 2012.
"Investors are basically receptive to these stocks," Commerzbank
analyst Heike Pauls said of Zalando and Rocket.
Zalando, whose rivals include Britain's ASOS, started out selling
shoes in Germany in 2008 and has expanded to 1,500 different shoe
and fashion brands in 15 European markets.
The firm, which is seeking to expand further in Europe, posted sales
of 520 to 560 million euros in the second quarter, when it achieved
its first-ever profit.
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Rocket Internet is bidding to create the largest Internet empire
outside the United States and China, seeking to replicate the
success of Amazon and Alibaba in markets that the U.S. and
Chinese e-commerce groups have yet to dominate, such as Africa,
Latin America, Russia and other parts of Asia.
Founded in 2007, Rocket is already active in more than 100
countries, making revenue of $1 billion in 2013 via online fashion
stores including Dafiti in Latin America and Lamoda in Russia, as
well as Jumia for general merchandise in Africa. Besides e-commerce,
it has created online marketplaces for everything from taxis and
meal deliveries to domestic cleaners.
However, unlike Zalando, Rocket Internet has yet to give potential
investors an insight into its finances, analysts said. "It's very
important that they put forward convincing numbers in a timely way,"
said Commerzbank's Pauls.
Germany's best-known venture capitalists, the Samwer brothers -
Oliver, Alexander and Marc - are major shareholders in both Zalando
and Rocket Internet through their Global Founders Fund. However,
Rocket Internet sold its direct stake in Zalando last year.
The two Berlin-based companies also have other investors in common,
including Swedish investment firm Kinnevik, JP Morgan Asset
Management and Holtzbrinck Ventures.
Holtzbrinck on Friday announced it was exchanging its individual
Rocket company investments for a 2.5 percent stake in Rocket
Internet itself - which values the company at around 4.4 billion
(Additional reporting by Emma Thomasson and Eric Auchard; Writing by
Jonathan Gould; Editing by Pravin Char)
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