Rocket Internet seeks about €600m in fresh equity

German ecommerce group has invested €1bn of its €1.4bn IPO proceeds

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Rocket Internet is planning to raise about €600m in a fresh equity offer, underlining the rate of cash burn at the Berlin-based ecommerce group that floated in October.

The ecommerce investor raised €1.4bn in its initial public offering and has invested about €1bn since its floated on the Frankfurt stock market. Its biggest recent investments have been in food delivery, including €496m for a 30 per cent stake in Delivery Hero, a Berlin-based online food takeaway service, and €150m on Kuwait-based food takeaway portal Talabat.

Rocket is spending an additional €110m to acquire a majority interest in HelloFresh, a grocery delivery business, also based in Berlin.

The company plans to sell up to 12m new shares, corresponding to about 7.8 per cent of its share capital. The final price and exact number of shares to be issued in the private placement will be announced on Friday, Rocket said.

Existing investors Baillie Gifford and United Internet have confirmed participation with orders worth €210m, Rocket said on Thursday. 

Oliver Samwer, chief executive, said the capital increase confirmed its commitment “to become the world’s largest internet platform outside of the US and China”. Analysts say Rocket provides investors with a unique opportunity to put money into ecommerce in emerging markets, where it often has first-mover advantage.

The new shares are expected to begin trading on February 17. The company said the funds would be used to finance growth, confirming plans to launch 10 new companies this year. Rocket also plans to invest in its operational platform.

So far, Rocket has had little difficulty raising cash from investors. But there is increased competition in emerging markets. 

Amazon announced an extra $2bn investment in its Indian operations last year, after Indian ecommerce company Flipkart said it had raised $1bn to upgrade its mobile technology platforms.

In a note to clients about Rocket last year, analysts at Berenberg led by Sarah Simon warned: “Given the rising competition in some markets from major players such as Amazon, the funds required to break even may be larger than originally envisaged.” Observers also warn that Rocket has a sprawling empire of companies, all of which are lossmaking. 

In recent months, Rocket’s management has sought to impose greater order on its operations. It is bringing together all its food takeaway businesses into a single global group, the same approach it applied to its fashion companies in September. Rocket shares closed down 4.2 per cent at €53.80 on Thursday.

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