BERLIN — Will it fly?
Following the lukewarm reception of Zalando’s Frankfurt stock debut Wednesday, that is the major question surrounding the initial public offering of Berlin Internet incubator Rocket Internet in Frankfurt today.
In the first two hours of trading in Frankfurt and an early 12.9 percent plunge below the initial offering price, the stock was down slightly.
On Wednesday night, Rocket Internet set its emission price at 42.50 euros, or $53.60 at current exchange, the upper limit end of its bookbinding range.
At 11 a.m. CET, the Rocket Internet share was trading at 41.39 euros, or $52.21, 2.6 percent below the emission price. By then, 138,165 units had changed hands.
The seven-year-old company moved up its unspecified October IPO to this week, citing high demand by investors. One source said the books had been filled 90 minutes into the roadshow. Rocket is placing nearly 33 million shares, which, together with an additional underwriters’ option to buy 4.9 million shares at the emission price, will bring Rocket at least 1.6 billion euros, or $2.02 billion. This sets Rocket’s value at 6.7 billion euros, or $8.45 billion, in what is the largest tech IPO in Germany in more than a decade.
In contrast, six-year-old Zalando’s IPO, a product of the Rocket Internet incubator and now Europe’s largest specialist fashion and footwear e-tailer, brought in 605 million euros, or $765.4 million, at the issue price, and valued the company at 5.3 billion euros, or $6.71 billion. Since its debut, Zalando has grown at an exponential rate, with sales expected to verge on 2 billion euros, or $2.52 billion, in 2014. More significantly, after extremely high start-up expenses in infrastructure, which has made Zalando fashion e-tail’s “number-one player in logistics and distribution,” according to an analyst, the e-tailer made its first profit in the second quarter.
Rocket’s financial standing is less clear, with total group sales and losses an unknown quantity. Aiming to “become the world’s largest Internet platform outside the U.S. and China,” the self-described “company builder” holds interests in 103 online companies and is active in more than 100 countries. In its IPO prospect, Rocket only released the sales and losses of its 11 so-called “proven winners,” of which Rocket holds a minority share. These include German home-furnishings e-tailers Westwing and Home24, Latin American fashion e-tailer Dafiti, Russia’s Lamoda, Asia-Pacific online fashion retail group Zalora and European food site Hello Fresh.
At the time of closing the IPO, Rocket’s shareholder structure saw 12.4 percent in freefloat, with the Rocket founders the Samwer brothers holding 41.1 percent; Kinnevik, 14.2 percent; United Internet, 8.2 percent; Philippine Long Distance Telephone Co., 6.6 percent; Access Industries, 6.5 percent; Holtzbrinck Ventures, 2 percent, and Cornerstone Investors, 9 percent.