United Internet, a provider of broadband and telephony services in Germany under the brand 1&1, has announced that it is investing a total of EUR435 million (USD583 million) for a 10.7% stake in venture capital group Rocket Internet. United Internet’s investment consists of EUR333 million in cash, and EUR102 million represented by the firm’s equity participation in venture capital funds Global Founders Capital. United Internet’s investment will be in newly issued shares by Rocket, of the same class and bearing the same rights as shares held by current Rocket investors. Following this investment, in addition to United Internet (10.7%), shares in Berlin-based Rocket Internet will be held by Investment AB Kinnevik (18.5%), Access Industries (8.5%), Philippine Long Distance Telephone Company (PLDT, 8.6%) and the Global Founders Fund (53.7%). By contributing its shares in the investment funds to Rocket Internet, United Internet will recognise one-off, non-cash income of around EUR70 million this year.
Founded in 2007, Rocket Internet says it identifies and builds proven internet business models and transfers them to new, underserved or untapped markets where it seeks to scale them into market leading online companies. It aims to become the world’s largest internet platform outside of China and the US; the company’s target markets are located mainly in the emerging markets of Latin America, the Middle East, Africa and Asia, as well as in Russia.