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Abu Dhabi, UAESaturday 15 December 2018

Naspers buys half of Rocket's stake in Delivery Hero

Deal is the latest high-stakes bet on online food delivery platforms by the South africa e-commerce major

Brokers work during the IPO of German startup company Rocket Internet at the stock exchange in Frankfurt, Germany. Naspers has bought half of Rocket's stake in Delivery Hero. AFP / Daniel Roland
Brokers work during the IPO of German startup company Rocket Internet at the stock exchange in Frankfurt, Germany. Naspers has bought half of Rocket's stake in Delivery Hero. AFP / Daniel Roland

South African e-commerce juggernaut Naspers increased its investment in online food takeaway firm Delivery Hero on Thursday, buying half the stake of German investor Rocket Internet for €660 million (Dh2.85 billion).

The deal is the latest high-stakes bet on online food delivery platforms by Naspers, which already runs similar sites in Brazil, Mexico, South Africa and in May paid US$80 million to buy into India's Swiggy.

The investment in loss-making Delivery Hero comes as some of Naspers' investors are losing patience with losses from more than a dozen e-commerce platforms that include Letgo and OLX - the biggest classified sites in India and Brazil.

Naspers first took a stake in Delivery Hero in May, a month before the Berlin-based takeaway firm went public. On Thursday, Naspers lifted its stake to 23.6 per cent, making it the biggest shareholder in one of Europe's largest internet start-ups.

The Naspers chief executive Bob van Dijk said the investment underlined his confidence in Delivery Hero's prospects, particularly in developing markets. Founded in 2008, Delivery Hero offers online food delivery in more than 40 countries around the world.

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"Many markets have experienced significant traction already, but we believe the potential is far greater in high-growth markets than that observed in the West," he said.

Delivery Hero, the world's largest online takeaway food delivery company, reported a 66 per cent jump in first-half revenue and sharply narrower losses on Wednesday, as it set its focus on breaking even in 2018.

Rocket Internet shares were up 5 per cent by 08.01 GMT and Delivery Hero rose 0.6 per cent, while Naspers' stock price slipped 0.2 per cent.

Rocket Internet, which built up and invested in dozens of businesses from fashion and furniture e-commerce to food delivery, has been cashing in on several of its start-ups as its share price has performed poorly since it listed in 2014.

It sold a stake in South East Asian online retailer Lazada to China's Alibaba in June, while the Global Fashion Group it founded with Sweden's Kinnevik sold a stake in its Middle East site in May. Rocket's shares also got a boost last month from a €100m stock repurchase.

On Thursday, Rocket Internet reported that aggregate revenue for its leading start-ups rose 29 per cent to €1.24bn in the first half, while it narrowed the adjusted loss before interest, taxation, depreciation and amortisation (ebitda) to €161m from €204m a year ago.

Rocket is still hopeful it can meet a target to make three of its start-ups profitable by the end of the year, although the chief executive Oliver Samwer told reporters on a conference call that the goal might slip by three to six months.

Rocket said its meal kit delivery company HelloFresh, which has been considering an initial public offering, saw net revenue rise 49 per cent to €435m in the first half, while its ebitda loss rose slightly to €47m.