Rocket Under Pressure to Cut Losses Amid Push for Startup IPOs

  • German investor's startups boost sales, fail to curb losses
  • Rocket shares fall most in more than a month in Frankfurt

Rocket Internet SE, Europe’s largest startup factory, showed little progress with reducing losses at its businesses, complicating its bid to sell shares in at least one of them.

Rocket’s portfolio value was little changed at 6.1 billion euros ($6.7 billion) after the first nine months of 2015, the Berlin-based company said Wednesday. While Rocket’s biggest startups increased sales 120 percent on average, operating losses widened at several of them, including at shopping site Lazada and meal-kit startup HelloFresh. Rocket shares fell the most in more than a month in Frankfurt trading.

The latest numbers, part of a regular update Rocket gives to investors on its companies it calls proven winners, complicate Chief Executive Officer Oliver Samwer’s bid to carry out an IPO for at least one of them within 18 months from September. Berlin-based HelloFresh delayed its IPO last month because of concern about investor demand and valuation in a volatile market, people familiar with the matter said at the time.

The nine-month loss before interest, taxes, depreciation and amortization at HelloFresh widened to 51.9 million euros from 6.1 million euros a year earlier, as sales more than quadrupled to 198 million euros. On a call with reporters, Samwer declined to comment on a possible IPO schedule for HelloFresh and Rocket’s other units.

Rocket said its plans are on track because its startups are increasing revenue and market share. Rocket will improve profitability at its units significantly in 2016 after losses bottom out this year, Samwer said on a call with analysts. The valuation of Rocket’s startups will likely increase in 2016 after a number of funding rounds, he said.

Shares of Rocket dropped as much as 4.5 percent, the steepest intraday plunge since Nov. 9. They fell 2.6 percent to 28.36 euros at 3:16 p.m. in Frankfurt.

Rocket said it’s not in conflict with shareholder Investment AB Kinnevik, rejecting a report by Germany’s Manager Magazin. The magazine reported that Rocket had removed Kinnevik’s CEO as its supervisory board chairman because the Swedish investor blocked HelloFresh’s IPO.

“We have a great relationship with Kinnevik, nothing has changed,” Samwer said. “Those are all rumors.”

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