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 Global e-commerce investor Rocket had sold shares at the top of
its price range and brought forward the debut by a week, citing
exceptional investor demand.
The shares started trading at the offer price of 42.50 but fell to
36.66 euros after a few minutes. By 1005 GMT (11:05 a.m. BST), they
were down 3.9 percent at 40.83 euros.
Analysts said investors have been concerned about the Berlin-based
company's lack of profitability but had bought shares hoping to ride
the tech listing wave which culminated in Alibaba's New York
flotation.
"Many investors subscribed much more shares than they normally would
have, hoping for a quick return. When some investors saw others
getting out, they did the same," said an equity capital markets
banker who declined to be named because he is not authorized to
speak publicly.
The IPO raised 1.4 billion euros ($1.8 billion), excluding an
over-allotment option. That is almost double the 750 million euros
the company said it expected to raise when it announced its listing
plans a month ago.
Rocket Internet has set up e-commerce sites and online marketplaces
for everything from taxis to meal deliveries in more than 100
countries. The group's revenue, which it makes by charging
consultancy fees to the companies it sets up, rose 43 percent to 47
million euros in the first half of 2014, while it made a net loss of
13.3 million as costs rose.
The Rocket management team went into a closed booth in the stock
exchange immediately after ringing the initial public offering (IPO)
bell, avoiding journalists' questions over the pricing of the debut.
RISK PROFILE
Oliver Samwer - who founded Rocket in 2007 with his brothers
Alexander and Marc - later played down the share fall, which came a
day after investors gave online fashion retailer Zalando's IPO a
lukewarm reception in Frankfurt.
"One should look at shares from a long-term perspective and not from
just one day, a week or a month," he said.
Germany's blue chip index DAX was down 0.2 percent by 1005 GMT
(11:05 a.m. BST) while the technology-oriented TecDax was down 1.3
percent.
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Union Investment fund manager Michael Muders said Rocket Internet
had a different risk profile than DAX bluechips.
"If you want to invest in Rocket Internet you have to be convinced
that the Samwers can establish an idea in the market faster than
anyone else. And you have to believe in the growth of emerging
markets," he said. "A professional investor needs to decide it he
can live with the risk and volatility," he added.
One of the IPO organizers said the share price fall was partly due
to the lackluster debut of Zalando's shares, which were down about 7
percent on Thursday after closing at exactly the issue price on
Wednesday.
"The poor performance of the Zalando shares in their debut clearly
weighed on Rocket Internet," said the organizer, who asked not to be
named.
Rocket Internet had initially offered its shares in a 35.50-42.50
euros price range. Berenberg, JP Morgan and Morgan Stanley were
joint coordinators of the offer, while BofA Merrill Lynch, Citigroup
and UBS were joint bookrunners.
(Reporting by Arno Schuetze and Harro ten Wolde; Editing by Georgina
Prodhan and Pravin Char)
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