ADVERTISEMENT

Startup Factory Rocket Internet to Delist After Value Drops

Startup Factory Rocket Internet to Delist After Fall in Value

Rocket Internet SE, the German company that aims to create and list tech startups, said it plans to withdraw its shares from the Frankfurt and Luxembourg stock exchanges after the value of its stock dropped about 15% this year.

The company will offer 18.57 euros each for the shares, and will repurchase as much as 8.84% of its stock on the exchange through Sept. 15, Rocket said in a statement on Tuesday.

Rocket frequently traded above $10 billion in the months after its 2014 IPO. Initially, the company could point to success stories such as Zalando, now one of Europe’s largest fashion retailers, and Lazada, a Southeast Asia-focused consumer electronics company that was sold to Alibaba. But after struggling to replicate its early wins, the company’s seen its value steadily fall.

Rocket shares fell 0.9% to 18.78 at 11:51 a.m. in Frankfurt, giving the company a market value of about 2.5 billion euros ($3.1 billion). The company has 1.9 billion euros of net cash on its balance sheet as of April 30, and value its current portfolio of over 200 private companies at about 1 billion euros as of March 31.

Startup Factory Rocket Internet to Delist After Value Drops

Rocket’s management now contends that the stock exchange isn’t the most attractive way to raise money and the company can rely on private funding for any future expansion needs. Taking the company off the market gives it the opportunity to “pursue a long-term approach” to decision making, Rocket said. The Global Founders GmbH division, which holds about 45% of the shares, and Chief Executive Officer Oliver Samwer, who owns 4.5% of the stock, won’t tender their holding in the company.

“An essential reason for a company to be listed on the stock exchange is the use of capital markets as a financing source,” the company said in the statement. “This purpose of the public capital market is, in the assessment of the management board, no longer required for the company.”

Only 16 tech companies have sought listings on European exchanges this year, a decade low, according to data compiled by Bloomberg. Proceeds from tech listings in the region are also the lowest globally at about $616 million this year. That’s a sliver of the $9.1 billion raised in the U.S. and the more than $23 billion from tech IPOs in Asia.

Not only are fewer businesses seeking new listings in Europe, companies are leaving the public market at an alarming rate. As of Aug 26, 412 companies and funds had delisted from European stock exchanges in 2020, according to the data.

Rocket will hold a virtual meeting of shareholders on Sept. 24 to pass the resolution, which will go through with a majority of votes.

©2020 Bloomberg L.P.