Kinnevik CEO Out After Failing to Win Over Tech Sectorby and
Swedish investment company names Joakim Andersson acting chief
Kinnevik says Grabau is leaving company with immediate effect
Lorenzo Grabau, a former Goldman Sachs banker who tried to push 80-year-old Swedish investment firm Kinnevik AB from TV and telecom investor to kingmaker of European internet businesses, was unceremoniously ousted as chief executive officer Wednesday.
Grabau, a Rome-born manager who joined Kinnevik in 2011 and become its CEO in 2014, tried to steer Kinnevik toward e-commerce through an up-and-down alliance with Germany’s Rocket Internet and a more recent emphasis on digital health, wealth management and education. But he was seen as unable to capture the kind of broad-based consumer internet opportunities creating fortunes from Beijing to Berlin to Silicon Valley.
"We needed a different set of skills," Chairman Tom Boardman said at a press conference Wednesday, “I don’t think it was a complete bolt from the blue,” he said. “The skills we need start with a deep understanding of markets, of technology, of consumers and consumer behavior.” That’s especially true as Kinnevik, one of a breed of European investors that traces its roots to family funds founded in the early 20th Century, finds itself competing with the likes of Google and Amazon.com Inc. for investments, its chairman said.
The Stockholm-based firm, which has a market value of about $6.8 billion, appointed Joakim Andersson as acting CEO. Andersson has been chief financial officer at Kinnevik since February 2015, after joining in 2001.
Kinnevik, originally concerned with candy and forestry holdings in the 1930s, had modernized over the years with investments in television and cellular phone services. It made online investments during the Web 2.0 boom in the mid-2000s.
Under Grabau, Kinnevik forged a profitable relationship with Rocket Internet SE and its hard-driving founder, Oliver Samwer, who had made a fortune mimicking U.S. internet business models and replicating them in Europe and Asia. Kinnevik invested 631 million euros in Rocket’s fashion retail company Zalando and 155 million euros in Rocket itself, becoming the biggest shareholder after Samwer and his brothers.
However, after disagreements about the strategy of that company, Grabau stepped down as chairman late 2015, and left the board in May this year. "We’ve built some great companies. And we’ve each gone our own way," he said in an interview this fall.
The departures came less than a week after Kinnevik invested 200 million euros in a Rocket-backed startup, Global Fashion Group, at less than half its implied valuation a year earlier.
Grabau knocked on doors in the U.S. to position Kinnevik as long money and an expert in European tech. But he struck only one investment in the U.S., participating in a $100 million round this year in automated wealth advisory Betterment LLC.
There were successes during his tenure: Zalando went public in a 2014 IPO; Kinnevik’s 32 percent slice of that company is currently worth 2.75 billion euros ($2.95 billion). Rocket and Kinnevik sold a stake in online retailer Lazada to China’s Alibaba Group Holding Ltd. this year that netted Kinnevik $57 million for less than 4 percent of the company. Last year, Grabau sold an interest in Avito, a Russian classified ads business, for $846 million.
In an interview with Bloomberg in November, Grabau said Kinnevik planned to spend 2017 investing 2 billion kronor ($220 million) to 3 billion kronor in companies worldwide. In March this year, Kinnevik also announced plans to recruit additional financiers to help it invest in e-commerce.
Portfolio returns this year in the nine months ended Sept. 30 were 6 percent for its e-commerce and entertainment holdings, yet dropped 8 percent for its financial services and communications investments.
Kinnevik’s shares have declined 7.2 percent this year in the Swedish capital, compared with a gain of 4 percent in the benchmark OMX Stockholm 30 Index.
Although Grabau’s exit was abrupt, Kinnevik has been considering new leadership for some time, according to Boardman. He stressed that there was “no single event” and the board has “the highest regard for Lorenzo,” but added that the plan to appoint a replacement was already being discussed in separate conversations among board members.
Boardman said the gathering "momentum" to remove Grabau led him to call a special board meeting the night before a scheduled gathering Wednesday to make a clear decision.