LDN - Business

Rocket Internet drops after major investor halves its stake

[February 23, 2017] By Emma Thomasson and Olof Swahnberg

BERLIN/STOCKHOLM (Reuters) - Shares in Rocket Internet fell as much as 14 percent on Thursday after major investor Kinnevik sold half its stake in the German e-commerce company as the two increasingly becoming competitors.

Sweden's Kinnevik, which clashed with Rocket last year over the valuations of some of their joint investments, sold a 6.6 percent stake in Rocket at 19.25 euros per share late on Wednesday, netting 209 million euros ($220 million).

At 1155 GMT, Rocket shares were down 13.1 percent at 18.55 euros, off an earlier 2-1/2 month low of 18.275 euros.

Founded in 2007, Rocket has built up dozens of businesses from fashion e-commerce to food delivery, but many investors have become concerned over heavy losses and falling valuations for its key start-ups.

Kinnevik was one of its first investors and, until the sale, was its biggest shareholder after the Samwer brothers who founded it.

However, Rocket's shares slumped last year after it was forced to cut its valuations for two of the ecommerce sites it jointly holds with Kinnevik - Global Fashion Group and Home 24 - as part of new funding rounds.

Joakim Andersson, who took over in December as acting chief executive of Kinnevik, which has become one of Europe's most prominent backers of tech companies, said the stake sale was part of a move to slim down its holdings.

He declined to comment on Kinnevik's plans for its remaining 6.6 percent stake beyond a 90-day lock-up period to which the company committed. Some analysts expect further sales.

"I see a very high probability that Kinnevik will sell its remaining stake in Rocket going forward as Kinnevik and Rocket are potential competitors for new investments,” Swedbank analyst Stefan Ward said.

Kinnevik also has stakes in a number of Rocket's start-ups and is still the biggest investor in Zalando <ZALG.DE>, the online fashion company which Rocket helped launch in 2008.

Rocket finance chief Peter Kimpel declined to comment on the Kinnevik move beyond saying: "We'll continue to work together on the businesses we jointly own."

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The logo of of Rocket Internet, a German venture capital group is pictured in this September 24, 2014 illustration photo. REUTERS/Dado Ruvic/File Photo

Kinnevik's Andersson also said the sale had no consequences for the Rocket companies in which it is invested.

Rocket's shares had jumped recently on speculation its food delivery firm Delivery Hero could soon be ready for an initial public offering (IPO).

Kinnevik has not invested with Rocket in its food holdings, which now accounts for the bulk of its valuation after it made a big push into the sector in 2015, a shift away from its initial focus on ecommerce in emerging markets.

In December, Kinnevik announced the sudden departure of its chief executive, former Goldman Sachs banker Lorenzo Grabau, who had helped steer the 2014 IPOs of Zalando and Rocket.

Grabau stepped down last year from Rocket's supervisory board, with both sides saying that was to prevent conflicts of interest as Rocket moves from an initial focus on setting up new online businesses to being more of an investment firm with a model similar to Kinnevik's.

In January, Rocket announced it had raised $1 billion for a fund to invest in its own start-ups and other companies.

Rocket said the Kinnevik sale meant that the free float in its shares had increased to 29.4 percent from a previous 22.8 percent, a factor that is an important consideration for inclusion in stock market indices.

($1 = 0.9488 euros)

(Reporting by Emma Thomasson; Editing by Maria Sheahan and Mark Potter)

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