BARCLAYS: Rocket Internet desperately needs some IPOs in 2017

Oliver SamwerWikipediaRocket Internet founder and CEO Oliver Samwer.

German startup factory Rocket Internet desperately needs some of the startups in its portfolio to go public in 2017, according to analysts at Barclays.

The Berlin-headquartered firm, which is a public company itself, reported losses of €741 million (£630 million) for 2016 on Tuesday, partly due to a lack of significant exits.

Losses at the company, which invests in existing internet companies and builds some of its own, were almost four times higher than losses in 2015, when the company reported a loss of €197.8 million (£168 million).

“In our view, the key to the story is an IPO of one of the assets in 2017E,” several Barclays analysts wrote in a note to investors on Wednesday.

There are a couple of companies in the Rocket Internet portfolio that are tipped to exit this year. Food delivery startups HelloFresh and DeliveryHero “are possible stories this year” wrote the Barclays analysts, who went on to say: “We think both are credible opportunities”.

Delivery Hero said on Monday that it is considering a stock market listing after reporting a 79% increase in full-year sales to €297 million (£252 million).

The analysts stressed that HelloFresh needs to show growth in the number of subscribers in the first quarter of its financial year. “If a clear sequential subscriber acceleration can be shown then investors should become more positive,” they said. “We think this will happen. If there is no clear acceleration in a quarter where seasonal factors should be favourable, it is right to ask questions on whether the underlying growth of the business is slowing.”

Rocket went public in 2014 when it listed on the Frankfurt stock exchange. However, shares in the company have continued to slide as investors question the company’s strategy.

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