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10 November 2011

Swedish Groupon investor nets 70x; Rocket makes $1bn

Investment Kinnevik's estimated return and Rocket Internet's $1bn boost also point to strong gains made by two corporate venturing units.

Author: Toby Lewis, Editor

Swedish Groupon backer Investment Kinnevik has made an estimated 70 times return on its investment in Groupon, the US daily deals company which floated on Friday, pointing to big gains for corporate backed venture firms Holtzbrinck Ventures and eVenture Capital Partners. Kinnevik and the corporates' investment partner in Groupon, Rocket Internet, which was founded by German businessmen Oliver and Marc Samwer, has a stake valued at roughly $1bn.

Investment Kinnevik, a listed investment firm, invested Skr20m ($3m) to buy its Groupon shares, a spokeswoman said. Kinnevik said on Monday it owned 8.4 million direct shares in Groupon, which would be valued at $210m based on Friday's closing price of $26.1 per share, suggesting Investment Kinnevik made the 70 times paper return, given the price of its initial investment.

The company backed Rocket Internet in 2009, investing €35m using shares and warrants to take a 25% stake, including the "in the money" warrants. Kinnevik said Rocket owned 39.2 million Groupon shares, which were worth more than $1bn at the end of the first day of Groupon's trading. However, Groupon's trading price has subsequently slipped to $24 per share at press time.

Kinnevik said the float of Groupon would lead to a Skr2.1bn upwards revaluation of its portfolio. The write-up suggests Investment Kinnevik's investments in Groupon and Rocket Internet have been revalued upward to SKR5.3bn (€584m) since its last reported results for the nine month to the end of September 2011.

Both Rocket Internet and Investment Kinnevik backed Citydeal, a German daily deals company acquired by Groupon in May last year. These gains point to a strong result for Citydeal's other backers which included eVenture Capital Partners, which has Germany-based retailer Otto Group as a cornerstone investor, and Holtzbrinck Ventures, the former corporate venturing unit of Germany-based media company Georg von Holtzbrinck Publishing Group, which became independent in January.

Citydeal raised €4m ($5.6m) in January last year and raised a further €5m in March 2010. This company owned 10.3% of Groupon ahead of the float, according to the daily deals company's regulatory filing

The other largest external shareholders in the business, besides vehicles related to family members of Groupon executives, were venture firms New Enterprise Associates (14.6%) as well as Accel Growth Fund (5.5%) and businessmen Alexander, Oliver and Marc Samwer (6.5%).

Other backers of Groupon include DST Global, a Russia-based investment fund backed by Naspers and Tencent, US-based fund managers T Rowe Price, the Growth Fund of America, Morgan Stanley Investment Management, and venture firms Technology Crossover Ventures, Kleiner Perkins Caufield & Byers, Andreesen Horowitz and Greylock Partners.

News provider PE Hub has also conducted a thorough analysis of what some of the other big winners from the Groupon flotation made. 

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