Jan 19, 2016 - We advise you that some of the information is based on statements by ... to the business, financial perfo
Presentation1
Agenda Page
[PRESENTATION TITLE]
April 2015
Rocket Internet Co-Investment Fund [CLIENT NAME]
19th January 2016 1
Disclaimer This document is being presented solely for informational purposes and should not be treated as giving investment advice. It is not intended to be (and should not be used as) the sole basis of any analysis or other evaluation. All and any evaluations or assessments stated herein represent our personal opinions. We advise you that some of the information is based on statements by third persons, and that no representation or warranty, expressed or implied, is made as to, and no reliance should be place on, the fairness, accuracy, completeness or correctness of this information or opinions contained herein. This presentation contains certain forward-looking statements relating to the business, financial performance and results of Rocket Internet SE, its subsidiaries and its participations (collectively, “Rocket”) and/or the industry in which Rocket operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words “believes,” “expects,” “predicts,” “intends,” “projects,” “plans,” “estimates,” “aims,” “foresees,” “anticipates,” “targets,” and similar expressions. The forward-looking statements contained in this presentation, including assumptions, opinions and views of Rocket or cited from third party sources, are solely opinions and forecasts which are uncertain and subject to risks. Actual events may differ significantly from any anticipated development due to a number of factors, including without limitation, changes in general economic conditions, in particular economic conditions in the markets in which Rocket operates, changes affecting interest rate levels, changes in competition levels, changes in laws and regulations, environmental damages, the potential impact of legal proceedings and actions and Rocket’s ability to achieve operational synergies from acquisitions. Rocket does not guarantee that the assumptions underlying the forward-looking statements in this presentation are free from errors nor does it accept any responsibility for the future accuracy of the opinions expressed in this presentation or any obligation to update the statements in this presentation to reflect subsequent events. The forward-looking statements in this presentation are made only as of the date hereof. Neither the delivery of this presentation nor any further discussions of Rocket with any of the recipients thereof shall, under any circumstances, create any implication that there has been no change in the affairs of Rocket since such date. Consequently, Rocket does not undertake any obligation to review, update or confirm recipients’ expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of the presentation. Neither Rocket Internet SE nor any other person shall assume any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or the statements contained herein as to unverified third person statements, any statements of future expectations and other forward-looking statements, or the fairness, accuracy, completeness or correctness of statements contained herein, or otherwise arising in connection with this presentation.
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Successful First Closing of Rocket Internet Capital Partners Fund First closing of Rocket Internet Capital Partners (the “Fund”) Commitments of $420m making it the largest European Fund
focused on internet investments even at first close Fund will co-invest alongside Rocket in a set ratio Rocket Internet participates in the economic upside of the Fund through investment return and carried interest
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Rocket Internet Capital Has Always Been Complemented by 3rd Party Capital Time to Breakeven
Significant Cash Balances
3rd Party Capital
Blue Chip Co-Investors
Cash at Operating Companies E-Commerce: 6-9 years Market place: 5-7 years
Average age of Proven Winners: 4 years
>€1.0bn as of 30 November 2015
Cash at Rocket Internet SE
ca. €1.1bn of 3rd party capital since IPO
ca. €1.7bn as of 30 November 2015
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Strong Interest from Alternative Asset Managers to Co-Invest with Rocket Internet Providing Non-Dilutive Capital Alternative Asset Managers
Pension Funds
Insurance Companies
Endowment Funds
Foundations
Minimum additional $420m of capital WITHOUT dilution for Rocket Internet shareholders
Institutional investors focused on alternative asset classes not investing in public equities provide long-term capital No “cannibalization” of demand for Rocket Internet stock 5
Co-Investment Fund will Greatly Improve the Speed, Efficiency and Economics
Increase in Speed of Fund Raising
Fund enables Rocket Internet to significantly enhance the speed of fundraising
Increase in Funding Efficiency
Fund replaces a portion of the direct co-investment capital that portfolio companies to date had to raise externally, round by round – reducing the management time spent fundraising
Increase in Economic Upside
Rocket Internet will earn carried interest of 20-25%, whilst previously Rocket Internet would not benefit from third party capital appreciation
Increase in Influence through Alignment of Interest
Rocket Internet as well as the Fund’s interests at portfolio level are aligned through the co-investment mechanics and significant investment exposure; thereby increasing joint influence at portfolio level
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Fund Model Superior to Case-by-Case Co-Investments Improving Funding Efficiency and Speed Previous Case-by-Case Co-Investment Model
New Co-Investment Fund Model
3rd Party Co-Investors1 8 Investors
20%
Individual 3rd Party CoInvestor(s)
80%
Co-Investment Fund
11 Investors 18 Investors 36 Investors 14 Investors
Across All Proven Winners 68 Different Co-Investors (1) Includes predecessor entities; Fashion4Home (acquired by Home24) investors not included
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Reliance on 3rd Party Capital Greatly Reduced and Securing Relevance of LPV Since IPO
With Rocket Fund ~€1.2bn
20% For valuation setting
Rocket Investments (excl. Delivery Hero)
3rd Party Co-Investors
Rocket
Rocket CoInvestment Fund
3rd Party Co-Investors in funding rounds
Setting of valuation
Maintaining relevance of LPV
3rd Party Co-Investors
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Rocket Internet Maintains Significant Ownership and Economic Upside Typical Incubation Phase
10%
Series A Financing €20m valuation pre-money
Management Ownership
€10m funding round 20% third party participation (validation) €10m Funding Round 80% €8m
90%
Rocket Internet Ownership
16% €1.6m
Rocket Internet 65.3%
20% €2m
64% €6.4m 6.4% €0.6m¹
No Participation
Fund
3rd Party Co-Investor
Management
21.3%
6.7%
6.7%
67.5%² Legal Ownership %
Economic Ownership %
(1) Rocket Internet indirect economic exposure due to 10% investment in the Fund (2) Combined direct and indirect ownership stake (Including investment of Rocket Internet in the Fund); excluding return from carried interest
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Improvement of Economic Ownership HelloFresh without Fund Rocket Internet SE Ownership1
Illustratively HelloFresh with Fund Key Assumptions - Carried Interest: 22.5%
Implied Rocket Internet SE Ownership2
- Exit at €2.6bn
60% 56%
€1.55bn
€1.45bn Fund: €45m Rocket Internet: €143m
€219m Capital Invested by Rocket Internet
Rocket Internet Stake Based on Post-money Valuation of Last Funding Round
€188m
Capital Invested by Rocket Internet & Fund
Rocket Internet Direct & Indirect Economic Ownership
Source: Company data (1) Rocket Internet ownership (2) Economic ownership includes direct stake as well as Rocket Internet’s indirect stake through its Fund investment and carried interest based on an implied exit at €2.6bn; no secondary investment rounds
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Rocket Internet Co-Investment Fund Key Terms Fund Size and Investment Structure
Target fund size: $500m Rocket Internet to contribute 10% of the Fund or minimum $50m Co-Investment ratio of 1:4 ($1 Rocket, $4 Fund), resulting in 28% economic exposure for Rocket Internet (combined direct and indirect exposure through the fund investment) Single investment limit is 10% of the Fund size Incubation rounds for Rocket Internet founded companies and strategic investments excluded
Investment Period & Term
Investment Period: 3 years (+ 2 x 1-year optional extension) Term: 9 years from final closing (+ 2 x 1-year optional extension)
Preferred Return & Carry
25% carried interest with full catch-up, reduced to 20% for cornerstone investors with commitments of $50m+ Carried interest to be paid, provided 8% p.a. for LPs minimum return
Additional Opportunities
At the discretion of Rocket Internet: commercial efforts obligation to procure offer of certain types of investment to LPs for co-investment Preference for investors with commitment of more than $50m 50% of performance fee charged for co-investments
Status
First close 19th January 2016 with $420m of commitments
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Fund Enables Rocket Internet to Capitalise on the Opportunities Ahead Rocket Internet Access to Capital €385m1
Size of the Latest Fund2 €2.3bn
€2.1bn €2.0bn
€1.7bn €1.6bn
Rocket Internet³
Fund
Capital Available for Portfolio Companies
(1) $420m commitments at first close at FX rate EUR/USD=1.09 (2) DST Global V (Aug-2015); General Atlantic Partners (Bermuda) III (Feb-2015); Tiger Global Private Investment Partners IX (Nov-2014). FX Rate EUR / USD = 1.09 (3) As of 30th November 2015
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Ability to Invest Larger Amounts Along the Lifecycle The Fund will be providing capital over the lifecycle of a company to proven online business models in markets outside the U.S. and China Early Stage
Expansion Stage
Friends & Family Angel Investors
Venture Capital
Private Equity Private Debt
Late Stage
Public Company
Sources of Capital
Company Revenue
Seed Stage
Commercial Lenders M&A Buyout
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Unique Benefits of Fund Provide Upside for Rocket Internet Shareholders Rocket Internet retains founder economics Seed-rounds for Rocket Internet incubated companies are excluded from the 1:4 investment ratio, since Rocket Internet provides a service well beyond that of a financial investor Rocket Internet maintains strategic flexibility The Rocket Internet management board has the flexibility to make the determination whether an investment is “strategic” in nature and hence can be pursued exclusively by Rocket Internet Rocket Internet retains optionality to invest more than 28% The Fund has a concentration limit of 10% of the fund size per company In significant opportunities with larger funding requirements, Rocket has the flexibility to increase its direct exposure significantly Performance fee accrues to Rocket Internet Rocket Internet serves as General Partner of the Fund and retains 75% of the performance fee, enhancing Rocket Internet shareholder returns 25% of the performance fee as retention mechanism for key employees Non-dilutive long-term retention tool
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Unique Leverage for Rocket Internet Access to a completely new class of institutional investors and non-dilutive capital Fund improves speed and efficiency of fund raisings for portfolio companies Economic participation in upside of the Fund improving the economic return proposition for Rocket Internet shareholders
Rocket Internet retains founder economics Rocket Internet maintains strategic flexibility Performance fee accrues to Rocket Internet and serves as retention tool for
key employees Increase in influence at portfolio companies through alignment of interest
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