Less than a month after reportedly sinking $40-80 million into Lamoda, Rocket Internet’s “Russian Zappos”, JP Morgan is investing once again in the Samwer brothers and their vision for a global e-commerce operation: the latest is Zalora, Rocket Internet’s fashion site based in Singapore and operating across seven countries in South East Asia. The investment comes just eight months after the site has launched. As is usual with investments in Rocket Internet companies, the company is not officially disclosing the terms of the deal but someone close to the company tells me the value is in the “significant double digit millions” of dollars, on a company that is apparently making double-digit millions of dollars in annualized revenue.
A look at past investments might give a clue to what kind of ballpark we are talking about: This deal makes this the seventh investment made in a Rocket Internet company by JP Morgan in the space of a month.
In addition to the $40-80 million in Lamoda, it also made an undisclosed investment in Europe’s Zalando and a $45 million investment in Brazil’s Dafiti. And it also, just days ago, also invested in Zando in South Africa, in a deal believed to be in the “three digit million rand” ballpark — or “tens of millions of dollars” to those who think in U.S. currency. In Asia, earlier this month JP Morgan reportedly also invested in Lazada. It also put $20 million in a cash-for-equity swap in another Samwer fashion brand, Australia’s The Iconic.
The news comes as another Samwer/Rocket venture gathers some momentum: the European Square competitor Payleven has released an API for its mobile payment service, similar to what iZettle is offering to merchants and developers to integrate its platform into their own apps, and has expanded operations into Italy.
According to the announcement issued today, JP Morgan is investing across all of Zalora’s footprint, which covers Hong Kong, Indonesia, Malaysia, Philippines, Singapore, Taiwan, Thailand and Vietnam, which collectively have a potential market of 500 million users.
In addition to JP Morgan and Rocket Internet, other investors in Zalora include Summit Partners and Invus. Zalora says it employs some 1,000 people. In JP Morgan’s Lamoda investment the company got cash-for-equity in the deal, but it’s not clear whether it is getting the same this time around.
So what to make of this relentless global expansion by the Samwer brothers? Well, if you think about the business model behind many of the world’s most successful e-commerce sites, they are all about achieving economies of scale. This is basically what is driving the Samwer brothers’ move to expand their fashion/shoe business to more and more markets. As these sites grow, they can collectively become a stronger buyer from fashion/shoe suppliers, keeping their costs down and improving margins in the process. And given that they have proven to be adept at creating exits for these operations — Groupon having acquired CityDeal, and eBay acquiring Alando some years ago to spearhead its international expansion — JP Morgan clearly is interested in getting in on the action.
But that does not mean all is smooth sailing for Rocket Internet, or Zalora. Just as Rocket Internet has had a tricky time in Russia, specifically in the early days, there have been reports hinting a similarly choppy situation at Zalora.
TechInAsia reported in April, just a month after the Zalora launched, that Oliver Samwer made a visit to the company’s HQ for a little staff motivation. Rocket Internet deniedany problems at the time, although it was just in the last two weeks that it put Mato Peric in charge as MD for Zalora. Peric is considered one of the most important executives in the Samwer empire, responsible for all ecommerce ventures worldwide, including the buildup of Dafiti, Jabong and others.
There have also been questions about operations in China and Rocket’s business in Turkey appears to be winding down.
J.P. Morgan Asset Management invests in ZALORA
Singapore, September 25, 2012 – ZALORA today announced that J.P. Morgan Asset Management has agreed to invest in the company, paving the way for further growth and expansion of South East Asia’s leading online fashion and lifestyle retailer.
“We are extremely pleased to count the distinguished global investment firm J.P. Morgan Asset Management to our shareholders. Their investment, which comes just eight months after the launch of ZALORA, demonstrates our success at bringing fashion to customers throughout the SEA region at the click of a button,” said Managing Director and Co-Founder Mato Peric. “Online retail holds tremendous potential in this market of more than half a billion customers, and we look forward to continued growth with our shareholders.”
J.P. Morgan Asset Management invested simultaneously into the ZALORA companies in five South East Asian countries as well as in Hong Kong and Taiwan. As the latest investor in ZALORA, J.P. Morgan Asset Management joins the likes of Rocket Internet, Summit Partners and Invus. ZALORA was founded in early 2012, employs more than 1,000 employees today and already achieved annualized double-digit million USD revenues.
Founded at the beginning of 2012, ZALORA has quickly become Asia’s leading online fashion and lifestyle destination. Featuring a wide selection of more than 300 brands across men, women and children’s clothing and home accessories, ZALORA offers its customers free shipping, a thirty-day return policy and a cash-on-delivery payment option. ZALORA currently operates across eight countries including Hong Kong, Indonesia, Malaysia, Philippines, Singapore, Taiwan, Thailand and Vietnam.
About J.P. Morgan Asset Management
J.P. Morgan Asset Management, with assets under supervision of approximately $2.0 trillion and assets under management of $1.3 trillion (as of June 30, 2012), is a global leader in investment management. J.P. Morgan Asset Management’s clients include institutions, retail investors and high-net worth individuals in every major market throughout the world. J.P. Morgan Asset Management offers global investment management in equities, fixed income, real estate, hedge funds, private equity and liquidity. JPMorgan Chase & Co. (NYSE: JPM), the parent company of J.P. Morgan Asset Management, is a leading global asset management firm with assets of approximately $2.1 trillion and operations in more than 60 countries. Information about JPMorgan Chase & Co. is available at www.jpmorganchase.com.