The Danish billionaire who is indirectly the largest shareholder in online retailer Asos has bought a 10 per cent stake in one of the company’s major rivals.
Anders Holch Povlsen has acquired the holding in German fashion site Zalando from existing investors, including Rocket Internet, the incubator known for cloning US start-ups.
No value was placed on the deal, which frees up more capital for Rocket’s investments in emerging markets.
The acquired stake would be worth €230m if Zalando were valued at twice last year’s sales, a measure that some analysts see as conservative.
Zalando’s sales rose 125 per cent to €1.15bn in 2012, as it expanded into seven more European countries. It is yet to make profit.
“This has two great benefits,” said Rubin Ritter, Zalando’s managing director, of Mr Holch Povlsen’s investment.
“First, he knows the fashion industry, and second, he’s very long-term oriented. He’s not in it for a short-term gain.”
Zalando and Asos are in growing competition, as both companies expand across Europe.
Mr Holch Povlsen is sitting on hundreds of millions of pounds in paper profits, following the recent rise in Asos shares.
He has built up a 27.5 per cent stake in the company through Bestseller, the family clothing company that he took over aged 28.
“We have never been bound by any single investor’s interest,” said Zalando’s Mr Ritter.
Zalando had found the UK market a “special case”, which has proved “more [different] than we actually expected” to continental Europe, he said.
At the same time as Mr Holch Povlsen’s investment, Rocket Internet, switched its holdings in Zalando into the hands of its own investors, leaving Swedish investment company Kinnevick as the retailer’s largest shareholder.
Rocket’s founders, the Samwer brothers, retain an 18 per cent stake in Zalando, through their holding company.
“We believe that a clearer ownership structure is a pre-requisite for an IPO, and this could in our view be a step towards a possible listing,” wrote Handelsbanken analyst Elias Porse in a note to clients.
Zalando has been meeting potential public and private investors in London and Germany recently.
“We have the potential to do a great IPO,” said Mr Ritter, adding that the company had made no decisions on such a move.
Hugo Boss recently pulled its Black label from Zalando, saying the site’s Scream for Joy slogan “does not suit [its] premium image”.