Rocket-Backed Global Fashion Group Raises $364 Millionby and
Berlin web investor contributes 68 million euros in round
Value of emerging markets e-tailer drops to 1 billion euros
Rocket Internet SE, Germany’s highest-profile startup investor, contributed 68 million euros to a 330-million-euro ($364 million) funding round for its startup Global Fashion Group, completing a deal first announced in April.
The financing values Global Fashion Group at 1 billion euros, less than half what the holding was worth last year. Rocket said three months ago that it planned to invest more in the startup at the lower valuation.
As part of its investment, Rocket converted financing it had previously contributed to Global Fashion Group, leaving the Berlin-based company with a 20.4 percent holding. Demand from existing investors increased the amount of the round by 30 million euros from 300 million euros announced in April. Rocket held 23.2 percent of Global Fashion Group at Dec. 31, according to a company filing.
The 68 million euros doesn’t include any investment by Rocket Internet Capital Partners, a related financing vehicle controlled by Rocket Chief Executive Officer Oliver Samwer. Rocket Internet Capital Partners did contribute an unspecified amount to the latest Global Fashion round, however. So did Swedish investment firm Kinnevik AB, which put in 161 million euros to raise its stake in GFG to 35 percent, a spokeswoman at Kinnevik said.
The deal comes at a time when Germany’s highest-profile internet company is trying to prove life as a listed startup investor can pay off for its shareholders. Rocket, which holds dozens of startups in areas including food delivery, furniture and fashion, went public in 2014 but has seen its shares tumble about 48 percent in the past year as some of its startups have faltered. Analysts have questioned its ability to wring profitable growth out of companies that operate in commodity sectors in unproven markets.
Rocket in April said it expected to invest up to 85 million euros in Global Fashion Group as part of the 300-million-euro round. "In other words, more raised just to keep post money valuation equal, suggesting a slight downward valuation on a pre-raise basis," said Neil Campling, head of technology research at Northern Trust Securities LLP in London, in a note to clients.
In May Rocket said it shrank first-quarter losses at some key startups by 40 million euros while its HelloFresh and Westwing businesses struggled in Germany.
Shares of Rocket were down 4.7 percent to 17.64 euros at 1:40 p.m. in Frankfurt Friday.