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Startup Incubator Rocket Internet closes 12.9% down in German IPO debut

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German startup incubator Rocket Internet closed at €37 per share, down 12.9% from the issue price of €42.5 per share on the day it made its debut on Frankfurt Stock Exchange’s Prime Standard.

The company debuted at €42.5 per share, flat from the issue price of €42.5 per share and during the day, it reached a peak of €42.5 per share and a low of €36.66. At the time of writing this article, the shares had further slid to €35.74, down 15.9% from the issue price.

It’s worth noting that Rocket Internet had earlier sped up (pdf) its IPO by closing the offering on October 1, 2014, following “exceptional investor demand across all points of the price range”. The company had mentioned that the offering was over-subscribed in excess of ten times at the top end of the price range (€35.50 – €42.50 per share).

Following this, Rocket Internet fixed the issue price at €42.50 per share, valuing the company at €6.7 billion. The incubator raised a total gross proceeds of €1.6 billion (around $2 billion) through this offering by selling 32.9 million newly issued shares (32,941,177 shares) and an over-allotment of 4.9 million shares (4,941,176 shares).

Using IPO proceeds to turn into operating company

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Last week, Rocket Internet had mentioned that it plans to use most of its IPO proceeds to launch new businesses and provide further investment to its existing network of companies.

Besides this, it also intends to invest in some of its younger companies to maintain majority stake in select younger companies over the long term. A part of the proceeds will also be used to consolidate its stake in some of its more established companies. A list of Rocket Internet-backed companies in India here.

Rocket Internet co-founder and CEO Oliver Samwer had told that following the IPO, they plan to take a more hands-on role in its network of companies, thereby transforming themselves an operating company from its prior role as an incubator. More on that here.

Rocket Internet had first announced plans to launch a IPO on the Frankfurt Stock Exchange in September this year. The company was initially looking to raise around €750 million in gross proceeds through this offering. However, later in the month, Rocket Internet nearly doubled this amount to €1.4 billion (around $1.9 billion) and €1.6 billion with the over allotment option (Green Shoe option) excercised.

Interestingly, this IPO consists solely of new shares and none of the existing shareholders are selling any shares as part of this offering for at least 12 months. Rocket Internet shareholders currently include Global Founders (the investment vehicle of Samwer and his brothers), Investment AB Kinnevik, Access Industries, Philippine Long Distance Telephone Company, United Internet and HV Holtzbrinck Ventures.

Also read: Jabong to be merged into Rocket Internet and Kinnevik’s fashion e-commerce roll-up Global Fashion Group

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