By Tiisetso Motsoeneng and Emma Thomasson
JOHANNESBURG/BERLIN (Reuters) – South African e-commerce giant Naspers <NPNJn.J> increased its investment in online food takeaway firm Delivery Hero <DHER.DE> on Thursday, buying half the stake of German investor Rocket Internet <RKET.DE> for 660 million euros ($775 million).
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 $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.
Rocket Internet shares, which have been under pressure over concerns about the value of the company’s portfolio of start-ups and their losses, jumped 5.8 percent by 0913 GMT. Chief Executive Oliver Samwer said the stake sale was a vindication of Rocket’s investment strategy.
Naspers first took a stake in Delivery Hero in May, a month before the Berlin-based takeaway firm went public. On Thursday, it lifted its stake to 23.6 percent, making it the biggest shareholder in one of Europe’s largest internet startups.
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 runs food takeaway sites in more than 40 countries.
“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 in a statement.
Delivery Hero, the world’s biggest online takeaway firm and the fourth to go public in recent years, reported a 66 percent jump in first-half revenue and sharply narrower losses on Wednesday, as it set its focus on breaking even in 2018.
Delivery Hero shares were up 0.9 percent by 0905 GMT, while Naspers’ stock price slipped 0.1 percent.
ROCKET CASHES IN
Rocket Internet, which invests in businesses from fashion and furniture e-commerce to food delivery, has been cashing in on several of its start-ups, helping its stock recover in the past few months from the withdrawal of major investor Kinnevik <KINVb.ST> this year.
It sold its remaining stake in Southeast Asian online retailer Lazada to China’s Alibaba <BABA.N> in June, while the Global Fashion Group it founded with Kinnevik sold a stake in its Middle East site in May.
Rocket, which announced a 100 million euro stock buyback last month, said it had 1.6 billion euros in net cash as of Aug. 31, before the Delivery Hero stake sale was agreed. Samwer said Rocket had not decided yet on possible further buybacks.
Rocket reported on Thursday that aggregate revenue for its leading start-ups rose 29 percent to 1.24 billion euros in the first half, while it narrowed its adjusted loss before interest, taxation, depreciation and amortization (EBITDA) to 161 million euros from 204 million a year ago.
It is still hopeful it can meet a target to make three of its start-ups profitable by the end of the year, although Samwer said 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 percent to 435 million euros in the first half, while its EBITDA loss rose slightly to 47 million euros.
(Reporting by Emma Thomasson and Tiisetso Motsoeneng; Editing by Ludwig Burger and Susan Fenton)