LDN - Business

Kinnevik sells out of Germany's Rocket Internet

[June 08, 2017] By Emma Thomasson and Olof Swahnberg

BERLIN/STOCKHOLM (Reuters) - Swedish investor Kinnevik has sold its remaining stake in German ecommerce company Rocket Internet for more than 200 million euros, capitalizing on a recent rally in the stock fueled by plans to list two of its start-ups.

Founded in 2007, Rocket has helped create a buzzing tech scene in Berlin by launching dozens of businesses from fashion e-commerce to food delivery, but has seen its stock halve since it listed in 2014 as valuations fell for its loss-making start-ups and plans for flotations stalled.

Rocket shares were down 2.5 percent at 20.45 euros by 1020 GMT (6:20 a.m. ET), albeit a far less dramatic fall than when Kinnevik sold half of its 13 percent stake in February and committed to a 90-day lock up for the rest, which it sold on Thursday.

"It is rather positive for Rocket as the share overhang is now eliminated and the rumors about an alleged dispute between the two should not burden the share price anymore," said Warburg analyst Lucas Boventer, who rates Rocket a "Buy".

Kinnevik said proceeds from the placement of around 10.9 million shares at 20 euros each to institutional investors would amount to 217 million euros ($244 million), bringing aggregate proceeds from the entire shareholding to 426 million.

Rocket shares have rallied in recent weeks on hopes that online food takeaway firm Delivery Hero and meal kit company HelloFresh could float soon, as well as news that Emaar Malls has bought into its Middle East fashion site.

However, Neil Campling, head of global TMT research at Northern Trust, said Kinnevik's timing was surprising given that Delivery Hero had just confirmed a plan to list. He warned that the increased free float could encourage more short sellers.

"We find the timing of all this somewhat odd. But then the relationship between Kinnevik and Rocket does appear to have become increasingly strained," Campling said.

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A woman walks past a banner at the shareholder meeting of Rocket Internet, a German venture capital group in Berlin, Germany, June 23, 2015. REUTERS/Fabrizio Bensch/File Photo

CO-INVESTORS AND COMPETITORS

Last year, Kinnevik forced Rocket to slash valuations for two of the ecommerce sites they jointly hold - Global Fashion Group and Home 24 - as part of new funding rounds, although both sides have denied reports of conflict.

Rocket Internet and Kinnevik executives say the parting of the ways is due to the fact the two have increasingly become competitors as Rocket has shifted focus from only launching its own businesses to investing in start-ups founded by others.

"Rocket has become more like Kinnevik, which invests in similar companies," Kinnevik spokeswoman Torun Litzen said on Thursday, adding that the timing was good for the sale and the move is in line with Kinnevik's strategy to trim its holdings.

Rocket finance chief Peter Kimpel said the relationship with Kinnevik remained close as they are still co-investors in companies such as Global Fashion Group.

He added that the increase in the free float is positive for Rocket's possible inclusion in the German mid-cap index.

Kinnevik was one of Rocket's first investors and, until the sale, was its biggest shareholder after the Samwer brothers who founded it. Rocket's next biggest shareholders are United Internet and British investor Baillie Gifford.

(Additional reporting by Helena Soderpalm and Alasdair Pal; Editing by Keith Weir)

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