By Alexander Hübner
FRANKFURT (Reuters) - German venture capital firm Rocket Internet and Zalando, Europe's biggest specialist online fashion retailer, are both on the brink of announcing plans to list on the Frankfurt stock exchange, several sources with knowledge of the matter said.
Both companies want to announce plans for initial public offerings (IPO) in the first half of September, meaning that the two biggest Internet listings in Germany for more than a decade could take place concurrently, the banking sources told Reuters.
"At the moment, the IPO market is still very receptive, but political uncertainties remain," said a banker involved in one of the deals, referring to the conflicts in Ukraine and Iraq. "So everyone is striving to tap the market as soon as possible."
Zalando, which is holding a media presentation on its business next Thursday, and Rocket Internet are likely to list stakes of around 15 percent each by selling new shares, separate sources have previously said.
Larger offers would risk diluting existing shareholders too much, something they want to avoid, bankers said. One banker estimated Zalando was seeking to raise around 900 million euros ($1.2 billion) and Rocket Internet about 800 million euros.
The companies declined to comment.
"If they really run in parallel, that would be very unfortunate," said a banker involved in the plans, voicing concern that the firms may have to compete for investment.
However, another source with knowledge of the plans said he expected the two companies to attract different kinds of investors, with Rocket Internet appealing more to technology or emerging market funds and Zalando to those looking for exposure to booming e-commerce in Europe.
Rocket Internet plans to use the cash raised in its listing to allow it to hold on to big stakes in the companies it helps create, one banker said.
Buoyant capital markets have encouraged a flurry of e-commerce flotations this year, with Chinese juggernaut Alibaba <IPO-ALIB.N> set to list soon, even though a recent sell-off in high-flying tech stocks has dampened investor appetite.
In the run-up to its listing, Alibaba has been expected to raise more than $15 billion, which would make it one of the biggest tech IPOs in history and close to Facebook's <FB.O> $16 billion initial offering in 2012.
"Investors are basically receptive to these stocks," Commerzbank analyst Heike Pauls said of Zalando and Rocket.
Zalando, whose rivals include Britain's ASOS <ASOS.L>, started out selling shoes in Germany in 2008 and has expanded to 1,500 different shoe and fashion brands in 15 European markets.
The firm, which is seeking to expand further in Europe, posted sales of 520 to 560 million euros in the second quarter, when it achieved its first-ever profit. [ID:nL6N0PT1IA]
Rocket Internet is bidding to create the largest Internet empire outside the United States and China, seeking to replicate the success of Amazon <AMZN.O> and Alibaba in markets that the U.S. and Chinese e-commerce groups have yet to dominate, such as Africa, Latin America, Russia and other parts of Asia.
Founded in 2007, Rocket is already active in more than 100 countries, making revenue of $1 billion in 2013 via online fashion stores including Dafiti in Latin America and Lamoda in Russia, as well as Jumia for general merchandise in Africa. Besides e-commerce, it has created online marketplaces for everything from taxis and meal deliveries to domestic cleaners.
However, unlike Zalando, Rocket Internet has yet to give potential investors an insight into its finances, analysts said. "It's very important that they put forward convincing numbers in a timely way," said Commerzbank's Pauls.
Germany's best-known venture capitalists, the Samwer brothers - Oliver, Alexander and Marc - are major shareholders in both Zalando and Rocket Internet through their Global Founders Fund. However, Rocket Internet sold its direct stake in Zalando last year.
The two Berlin-based companies also have other investors in common, including Swedish investment firm Kinnevik <KINVb.ST>, JP Morgan Asset Management and Holtzbrinck Ventures.
Holtzbrinck on Friday announced it was exchanging its individual Rocket company investments for a 2.5 percent stake in Rocket Internet itself - which values the company at around 4.4 billion euros.
(Additional reporting by Emma Thomasson and Eric Auchard; Writing by Jonathan Gould; Editing by Pravin Char)