Germany’s Rocket Internet Aims for $968 Million IPO

German venture capital firm Rocket Internet unveiled plans for a stock market listing that could value the company behind dozens of online start-ups at $6.5 billion, riding a wave of e-commerce IPOs.

Rocket’s announcement on Wednesday of plans to raise about 750 million euros ($968 million) by selling new shares pits it against Europe’s biggest online fashion firm Zalando and China’s Alibaba in the quest for investors this month.

Alibaba’s initial public offering is expected to cap the flurry as the biggest technology flotation ever, surpassing Facebook’s $16 billion listing in 2012, while Zalando’s share sale would value it at about $5.8 billion.

Berlin-based Rocket said in a statement its offer would consist solely of new shares and it would use the proceeds to fund growth by launching new businesses and providing more capital to its existing companies.

A source with knowledge of the plans said Rocket planned to list a stake of about 15 percent, giving the group a total value of some $6.5 billion.

Rocket Internet wants to replicate the success of Amazon and Alibaba in markets that the U.S. and Chinese e-commerce groups have yet to dominate, such as Africa, Latin America, Russia and other parts of Asia.

Founded in 2007 by brothers Oliver, Alexander and Marc Samwer, Rocket is active in more than 100 countries, with sales of $1 billion in 2013 via e-commerce and online marketplaces for everything from taxis to meal deliveries.

“We believe the Internet will play a transformational role in people’s lives everywhere, particularly in emerging markets,” said Oliver Samwer, chief executive, adding he was not concerned about competing with Alibaba for attention.

“Ultimately we are a very unique story. … We believe investors will value the exposure that they can get through us to those fastest growing markets,” he said.

The Samwer brothers own 52.3 percent of the existing Rocket stock and hold 17 percent of Zalando, a company Rocket helped launch, so the two listings would make them billionaires.

The Rocket businesses have succeeded in attracting a raft of high-profile investors — most recently securing 768 million euros from German service provider United Internet AG and Philippine Long Distance Telephone Company.

The Rocket and Zalando listings are the biggest technology offerings in Germany since the bursting of the dot-com bubble more than a decade ago, and the Rocket flotation would be the biggest in Europe since Russia’s Yandex in 2011.

Rocket is expected by analysts to appeal more to technology or emerging market funds, and Zalando to those looking for exposure to booming e-commerce in Europe. Zalando hopes to raise more than 500 million euros by listing a stake of 10-11 percent.

“Rocket has an extremely interesting business model — they are taking quite simple business models which work well in Europe and launching them in emerging markets,” said analyst Bjorn Gustafsson, analyst at brokerage Kepler Cheuvreux.

The Samwer brothers have gained notoriety for cloning businesses pioneered in Silicon Valley in new markets, such as a German online auction site that they sold to eBay and Zalando, inspired by Amazon-owned fashion site Zappos.

Rocket says it can launch a company within 100 days by drawing on expertise in areas such as finance, communications, marketing and business intelligence at its Berlin head office, helping it start an average of three to six new firms a year.

Rocket plans to apply to list its shares in Frankfurt via the “entry standard,” which requires less detailed financial information than the “general” or “prime” standard that Rocket hopes to reach within 18-24 months.

Rocket has released limited financial details so far. Its top 10 e-commerce ventures — including fashion sites such as Lamoda in Russia and online furniture stores Home24 — had sales of 743 million euros in 2013 and an operating loss of 431.6 million, according to figures from major investor Kinnevik.

Samwer said Rocket would publish more figures with its listing prospectus and would report results on a half-yearly basis in future, but said profits were not an immediate goal.

“We are in a high growth phase and investing for growth … we do have a clear path to long-term profitability,” he said.

Rocket’s six main shareholders — including Sweden’s Kinnevik and the Samwer brothers’ fund — would sign lock-up commitments not to sell their shares for at least 12 months.

Kinnevik, a major investor in Rocket and Zalando, has seen its shares soar in the last year as investors sought exposure to e-commerce, but analysts say it might lose some appeal now that both are firms listing.

Last week, Rocket and Kinnevik announced plans to combine Rocket’s five emerging market online fashion start-ups to create a new group they said would be worth 2.7 billion euros, but Samwer declined to comment on speculation they might ultimately spin out that business from Rocket.

Berenberg, JP Morgan and Morgan Stanley are joint coordinators of the Rocket share offer, while BofA Merrill Lynch, Citigroup and UBS are joint bookrunners.

(Reporting by Emma Thomasson; Additional reporting by Mia Shanley in Stockholm and Kathrin Jones in Frankfurt; Editing by David Clarke)

This article originally appeared on Recode.net.