Rocket Internet invests $1.9 billion in an online food-delivery service

February 6, 2015 11:09 AM

(Bloomberg)—Rocket Internet AG, the startup investor founded by Germany’s Samwer brothers, bought a minority stake in Delivery Hero Holding GmbH that values the four-year-old online food-takeaway service at almost $2 billion.

Rocket paid 496 million euros ($568 million) for a 30% holding in the Berlin-based company, which has operations in 24 countries across Europe and South America. Called Lieferheld in German and featuring a mascot reminiscent of comic hero Superman, Delivery Hero’s early backers include publisher Georg von Holtzbrinck GmbH and food retailer Tengelmann.

“It’s a perfect complementary fit for our takeaway businesses in other parts of the world,” Rocket Chief Executive Officer Oliver Samwer said on a conference call. Food delivery “is the biggest market we can be in. It’s the emerging frontier of e-commerce.”

Rocket, which became famous for cloning businesses from shopping website Groupon Inc. to the Airbnb Inc. lodging-reservation service, raised 1.4 billion euros last year in an initial public offering that turned brothers Marc, Oliver and Alexander Samwer into billionaires and provided the Berlin-based investment company with funds to push deeper into Web retailing in emerging markets. The acquisition marks a departure from Rocket’s usual strategy, which consists of building businesses from the ground up.

The alliance of Delivery Hero with Rocket’s HelloFresh and Foodpanda businesses creates the biggest Internet-based food- ordering service outside of China, with an annualized 78 million orders, according to the investment company.

Rocket stock has climbed 22% since the IPO in October, valuing the company at 7.92 billion euros.

In November, Rocket’s own food-delivery units exchanged local businesses in Argentina, Chile, Colombia, Ecuador and Peru for Delivery Hero units in India and Mexico so the two companies would no longer compete in those markets.

Samwer, who often likens his business to that of Alibaba Group Holding Ltd., said he considers Rocket as the “gorilla” in the online-takeaway market, with growth and margins bound to exceed those of rivals Just Eat Plc and GrubHub Inc.

Separately, Rocket said that, following new investments totaling 130 million euros, its stake in HelloFresh is now 52%. HelloFresh, which delivers ready-to-cook grocery packs, is one of the few Rocket units to target the U.S. market.

Delivery Hero, founded by Team Europe Ventures in Berlin, aggregates takeaway-ordering services by placing menus online and organizes neighborhood restaurants on the Web. Its other investors include Insight Venture Partners LP, Kite Ventures PE, ru-Net Ltd., Point Nine Capital, Phenomen Ventures and Vostok Nafta Investment Ltd.

Rocket paid 287 million euros for new Delivery Hero shares, and another 209 million euros for a stake sold by existing investors, Delivery Hero CEO Niklas Oestberg said in an e-mailed response to questions.






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