PLDT buys stake in Germany's Rocket Internet for P19-B

Posted at 08/07/14 2:06 PM

MANILA, Philippines (UPDATE) - Philippine Long Distance Telephone Company (PLDT) is buying a 10 percent stake in German technology incubator Rocket Internet AG.

In a statement, PLDT said it has entered into a global strategic partnership with Rocket "to drive the development of online and mobile payment solutions in emerging markets."

Under the deal, PLDT will invest €333 million (around $446 million or P19.6 billion) for a 10 percent stake in Rocket. New shares for PLDT will be issued by Rocket, in the same class and bearing the same rights as shares held by current investors.

Rocket, an e-commerce-focused venture capital company, focuses on identifying and building proven Internet business models and transferring them to new and untapped markets and seeks to scale them into market-leading online companies. Among its most popular brands in Southeast Asia are e-commerce businesses Zalora and Lazada.

As part of the investment, PLDT will have the right to appoint one member of Rocket's 9-person Supervisory Board.

PLDT said it will fund the investment from available new cash and new debt.

The telco giant joins Investment AB Kinnevick, Access Industries, Global Founders GmbH as investors in Rocket.

PLDT said the investment in Rocket reflects its long-term commitment and ability to combine its mobile money expertise with Rocket's global technology platform.

Also, PLDT and Rocket will jointly develop mobile and online payment technologies and services in emerging markets.

"We are very excited to embark on this journey with Rocket. Our investment demonstrates our commitment to the global Internet market and our belief in the powerful synergies between e-commerce and mobile payments, particularly in development economies," PLDT president and CEO Napoloen Nazareno said.

Oliver Samwer, founder and CEO of Rocket Internet, said both Rocket and PLDT share a vision for the growth opportunity of Internet and mobile business models in emerging markets, as smartphone penetration continues to surge.

"We believe in our ability to create significant value together, leveraging Rocket's platform and PLDT's expertise... Financial technology is a key focus sector for Rocket and this partnership will allow us to build on PLDT's world-class innovations in mobile money and micro-payments and accelerate the delivery of these solutions around the world," Samwer said.

Rocket Internet was founded in 2007 by brothers Oliver, Marc and Alexander Samwer and is active in 102 countries, making revenue of $1 billion in 2013 via online fashion stores including Dafiti in Latin America and Lamoda in Russia, as well as Jumia for general merchandise in Africa.

The Samwers have raised 3.5 billion euros of funding for Rocket Internet and its ventures, sources say, including from Swedish investment firm Kinnevik, billionaire American industrialist Leonard Blavatnik, JP Morgan Asset Management and retailers such as Britain's Tesco and Germany's Tengelmann and Rewe.

Kinnevik said on Thursday it would own a 21.5 percent stake in Rocket after the investment and that its own book value at the end of June would have been 4.8 billion Swedish crowns ($696 million) higher had the latest value for Rocket been included.

Sources have said Rocket Internet is considering a stock market listing in Frankfurt later this year.

Rocket Internet also helped launch Zalando, Europe's biggest online fashion retailer, which is considering its own stock market listing. Rocket is no longer invested in Zalando, but the Samwer brothers' European Founders Fund still owns 18 percent. - With Reuters