3. September 2012–
US financial firm JP Morgan is continuing to buy up stakes in select Rocket Internet online fashion retailers – first in Europe (Zalando), then in Brazil (Dafiti) and now in Russia, with Rocket's Lamoda today announcing a cash-for-equity deal, terms undisclosed.
According to an insider source speaking to Russian newspaper Kommersant, the deal could be worth between $40 and $80 million, which would make it one of the largest investments so far in a fashion e-commerce company in Russia.
Lamoda, founded one-and-a-half years ago by Dominik Picker, Florian Jansen, Burkhard Binder and Niels Tonsen, now employs 800 people and claims about five million unique users.
It's just one of about 100 companies built by Berlin-headquartered Rocket Internet, best-known for fast execution and a track record of cloning promising US businesses in new markets. The Samwer brothers – Oliver, Marc and Alexander – founded Rocket in 2007.
Lessons from "blitzkrieg" email – Lamoda
TechCrunch reports the deal was made via a German holding company and reminds us Oliver Samwer's infamous "blitzkrieg" email referenced mistakes made before October 2011 in Russia, including with business reporting, leading to unnamed founders losing 50 per cent of equity and going without salary for six months.
That company seems likely to be Lamoda, as Rocket's only other listed portfolio companies in Russia are international shopping club Westwing and Mebelrama, an online homewear shop founded in 2011 with Facebook page only set up in November 2011.
Rocket Internet – become number one or shut shop?
Attracting JP Morgan investment alongside Zalando and Dafiti would appear to show a turnaround. While Zalando is still posting losses (despite €510m turnover in 2011), it's considered the flagship within Rocket Internet's online empire, with no trouble attracting investment from Rocket Internet regulars Holtzbrinck Ventures, Tengelmann Ventures and AB Kinnevik as well as Yuri Milner's DST Global.
Lamoda co-founder Niels Tonsen said in a statement the new JP Morgan funds would be used to expand the company's portfolio, currently sitting at 500,000 products from 700 mainstream and international brands, and its presence in countries outside Russia.
“The investment underlines our leading position in one of the world’s fastest growing markets,” he said. “It will allow us to further expand our product and brand portfolio as well as our presence in other emerging markets such as Ukraine, Kazakhstan, Azerbaijan and Belarus. We will continue to streamline our fulfillment and delivery processes and to enhance the online shopping experience for our customers.”
Rocket Internet is currently in the middle of a global portfolio shake-up, shutting down operations in Turkey after hiring hundreds over the course of about one year, and collapsing retailer Mizado into sister brand Namshi in the United Arab Emirates.
Rocket also recently agreed to sell 50 per cent of its Latin American and African holding companies to telco group Millicom for €340 million, including the option for Millicom to acquire the rest at fair market value by 2016.
FOR RELATED READING, CHECK OUT:
We want shoes and fashion, baby – JP Morgan invests in Zalando
Last week Zalando, this week Dafiti: JP Morgan backs Rocket Internet by additional $45m
Tasting the Eastern promise: Top 10 VC companies investing in Russia