Kinnevik, Europe’s largest listed investor in technology companies, plans to sell its €5.5bn stake in Europe’s largest online-only retailer Zalando, as it shifts focus to fast-growing and privately owned start-ups.
The Swedish family-controlled group said on Wednesday that it wanted to distribute its 21 per cent holding, which makes it the biggest shareholder in Zalando, to Kinnevik’s investors.
“For Kinnevik, the distribution means an increased focus on the early growth portfolio in line with our strategic transformation . . . By distributing Zalando to our shareholders, the portfolio distribution becomes more balanced and unique, and we will have more than two-thirds of our capital invested in a diverse set of younger, high growth, increasingly private digital companies,” said Georgi Ganev, chief executive.
Kinnevik is in the midst of what it calls its “third pivot” as the investment group boosts its exposure to unlisted start-ups. It started by using the stable cash flows and dividends from pulp and paper to push into telecoms and media in the 1990s, before moving into internet companies such as Zalando, Rocket Internet and Avito in the 2010s.
The Swedish group owned as much as 32 per cent of Zalando after its initial public offering in 2014 but has sold down its stake twice already, using the proceeds to invest in digital healthcare companies such as Livongo, VillageMD, and Cityblock. It said it had made an 8.6 times return on its SKr7.9bn ($950m) investment in the online fashion retailer, which is based in Germany and whose share price more than doubled last year.
Its investors will need to back the plan to sell the rest of its stake in Zalando.
The share of fast growth and unlisted businesses in Kinnevik’s portfolio will both almost double after the distribution, which is already backed by shareholders representing half of the votes. High-growth companies will jump from 37 per cent to 67 per cent of its assets while unlisted will be 27 per cent, up from 15 per cent.
Kinnevik said its high-growth companies enjoyed a return of more than 100 per cent in 2020 as the Covid-19 pandemic boosted two of its biggest bets on online groceries such as Norway’s Kolonial and digital healthcare.
Ganev insisted that Kinnevik still believed in Zalando and what he called its “visionary strategy”.
“With the company’s maturity and strong market position, and strong momentum generated by consumers’ accelerated shift to digital, I am convinced that Zalando will continue to execute on its growth strategy and create significant value for its shareholders going forward.”
Anders Oscarsson, head of equities at Swedish pension fund AMF, backed the planned distribution, saying: “As investors in both Kinnevik and Zalando, we believe this transaction will benefit long-term shareholders of both companies.”
