Kinnevik part ways with Rocket internet, sells off 6% stake

Kinnevik

Swedish tech investor, Kinnevik has launched an accelerated bookbuild to dispose its stake in Rocket Internet, another major tech investor with major holdings in Jumia, Delivery Hero and other startups.

Kinnevik AB said it has launch of an accelerated bookbuilding process to institutional investors of approximately 10.9 million existing shares in Rocket Internet SE. The Placing Shares represent 6.6 percent of the Company’s issued share capital and constitute Kinnevik’s entire remaining shareholding in the Company.

The company disclosed that Joh. Berenberg, Gossler & Co. KG will be acting as Sole Bookrunner in the Transaction. The placement price is subject to agreement between Berenberg and Kinnevik at the close of the bookbuilding process, and the results of the Transaction will be announced as soon as practicable thereafter.

The announcement as released by Kinnevik signal the end of a special relationship that more or less ‘turned sour’ after the two companies clashed on methodologies for valuing companies they both have stakes in.

It could be recalled that Kinnevik first took the bold step by first selling half of its holding in Rocket Internet. The move saw Rocket Internet’s stock losing serious value on the Frankfurt Stock Exchange.

This development means a whole lot to the European and tech investment space. At the surface level, it means Rocket Internet has lost one of its most committed investor for some of it’s it biggest European tech startup such as Global Fashion Group, Home24 and Linio. On the very serious side of things, Kinnevik and Rocket Internet have more or less declared that they are out to compete with each other ‘squarely’.

Take Nigeria for example, Rocket Internet owns a little above 20% stake in Jumia, a general merchandise eCommerce company that competes head on with Konga where Kinnevik holds about 44% stake with the backing of Naspers as co-investor. The ‘divorce’ between Rocket Internet and Kinnevik means a whole lot for these two startups that are trying to cut losses and make their first profit since they started.

Analysts see various scenarios. First might be a fresh funding round for Konga that might be led by Kinnevik to either buy-off Naspers stake in the business or buy a substantial stake that will give it full control of Konga. The last time Konga raised funding was in 2014 when the company raised USD65 million Series C funding from Kinnevik and Naspers. Both companies have not publicly confirmed any latest injection into the company.

An alternative scenario is for both Naspers and Kinnevik to sell off their stake to Rocket Internet. This is an unlikely possibility but analysts who spoke to PageOne.ng are of the opinion that actions of both Naspers and Kinnevik in the last three months suggest both companies are individually reviewing their startup portfolio. Naspers has indeed activated an ‘exit-frenzy’ in the last eight to nine months.

Last year, the company suddenly announced its exit in Allegro, a European eCommerce company, selling it for USD3.2 billion. Its biggest exit this year was its co-exit in Souq.com when Naspers and other concerned investors sold the Middle East eCommerce company to Amazon for USD709 million. Its latest exit which was more or less a loss was when it announced the closing down of Markaforni, its Turkish eCommerce startup that did not break even.

As for Kinnevik, the company’s exit in Rocket Internet speaks volume. For many years, it has been a strong ally of the company. The final exit in Rocket means, it is revising its portfolio and partnerships going forward. As we know it, there are no record of dispute between Kinnevik and Naspers. Both companies will however, need to decide their future actions for Konga.