Shooting for the moon

Rocket Internet exploits tech stardust

Rocket Internet is exploiting tech stardust. The German tech group raised euro 588.5 million ($673 million) in fresh equity on February 13, just four-and-a-half months after its initial public offering.

It's unusual to come back to the public markets for a big slug of capital so soon afterwards, and the dilution will be significant: the new stock represents a 7.8 per cent stake. But then this has been a wild ride for the star-tup investor's shareholders. The shares dropped 13 per cent on their debut, and took nearly a month to recover, but were up almost 30 per cent before the placing.
 
The proceeds will restore Rocket's cash pile to about euro 1.7 billion, after it struck nearly euro 800 million of deals to consolidate online takeaway platforms across the developing world. Chief Executive Oli Samwer, one of three brothers behind the group, did much the same pre-IPO with fashion e-tailers.

Whether you think this is wise or not depends on your view of the Samwer ethos - running round the emerging markets, buying, backing or launching local clones of western outfits like Just Eat, GrubHub or ASOS, before Amazon or Alibaba can establish market dominance. Not only are the businesses in unpredictable places, many of them are short on track records and revenues too. That makes valuing the parent company tricky.

It's hard to fault the brothers' timing, though. Germany's DAX index is breaking records. Venture capital investment in tech companies is booming. And for further evidence of risk appetite, consider that the bookrunners got this away while several other blue-chip placings were in the market, including BT, Kion, Mediaset, Mediobanca and Valmet.

The latest move underscores Rocket's ambition - and shows that this needs to be a high-conviction investment. But then, most investors probably knew this already.