Activist Paul Singer drives the stock of Rocket Internet

Hamburg Actually, it has been off the floor since the end of October: the share of Rocket Internet. Since the official withdrawal from the stock exchange, the paper has only been traded on the Hamburg Stock Exchange.

Those investors who did not respond to the company’s buyback offer and who kept their shares saw a hefty price increase on Tuesday: the shares rose by a good six percent to EUR 21.46 – well above the buyback price of EUR 18.57 from autumn. Shares worth a good three million euros changed hands on Tuesday.

The sudden hype of the undead stock has a reason. Rocket Internet published the new shareholder structure on its website. According to this, the activist investor Paul Singer now holds a good 15 percent of the shares through his Elliott fund.

Singer is known at least since he successfully bet on the bankruptcy of Argentina. He was also active in Germany: in 2019 he used the glyphosate crisis to put pressure on Bayer close. At Thyssen-Krupp he accelerated the restructuring, at Scout24 the split-up of the company.

At Rocket Internet, Singer could possibly rely on the lawsuits that shareholders have already announced against the withdrawal from the stock market. Rocket Internet boss and major shareholder Oliver Samwer was heavily criticized because Rocket Internet had chosen an unusual type of stock market retreat.

The compensation offer did not come from a shareholder, but from the company itself. In addition, the offer was comparatively low because the heyday of the corona crisis was included in the calculation of the average price to be paid over the past six months prior to the offer.

Samwer had also emphasized several times that there were no specific plans to withdraw from the stock exchange. Shareholder advocates spoke vigorously of “legal fraud”, but the stock exchange supervisors did not object to the plans.

Singer could be bought out

Therefore, another scenario is likely to be more likely: Singer could simply speculate on a new, higher buyback offer from Samwer – whether officially or via the stock exchange. Finally, the stock exchange traders speculated that sooner or later Samwer wanted to get rid of the remaining shareholders. To do this he would have to buy out Singer. And it has been proven that it knows how to make itself unpopular with board members and supposedly more powerful shareholders.

Samwer is the main owner with 49.6 percent through his company Global Founders. Also Merrill Lynch and the hedge fund 683 Capital Partners hold blocks of shares. The company itself holds 20.5 percent of the shares through the buyback. The free float is 5.1 percent.

Samwer recently emphasized that after the stock market withdrawal, Rocket Internet should continue to found start-ups and make them big. However, the group can now finance itself well off the stock exchange – and can thus do without reporting obligations and other cost factors.

In the first nine months of 2020, Rocket Internet’s after-tax profit fell significantly: from 306 million euros to just 8.2 million euros. The fact that the RICP rocket fund incurs start-up losses contributed to this.

The corona crisis is also apparently putting pressure on the value of the catering business of the B2B food group, which includes several catering start-ups. In the previous year, Rocket also had, among other things, shares in Hello Fresh sold – in retrospect, however, prematurely, because the share of the Kochboxversender rose significantly in 2020.

More: Criticism of the stock market withdrawal – “a bottomless cheek”

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