News in this morning indicate that Investment AB Kinnevik and Rocket Internet have agreed to merge five leading fashion e-commerce businesses Dafiti (Latin America), Jabong (India), Lamoda (Russia & CIS), Namshi (Middle East) and Zalora (South East Asia & Australia) to create a new global fashion e-commerce group (“GFG”).
According to Oliver Samwer, co-founder and CEO of Rocket, GFG will be focused on capturing the massive growth opportunity of fashion e-commerce in emerging markets. He added: “Each of the business units will be able to build on the original Rocket platform and continue to leverage knowledge and expertise gained across 23 countries. I look forward to working with our founders in accelerating GFG’s growth profile and development even further.”
GFG will operate across the five continents and will cover 23 countries with a EUR 330 billion fashion market and population of over 2.5 billion people. It will market a wide assortment of leading International apparel and accessories brands and local assortments for specific ethnic markets notably in India, Indonesia and the Middle East.
The five GFG companies combine a unique expertise of developing leading online brands (e.g. Dafiti in Brazil), building the necessary infrastructure including where necessary last mile delivery networks (e.g. Lamoda Express in Russia), creating leading private label brands (e.g. “Lara Karen” and “Sangria” by Jabong in India and ”ZALORA” and “Ezra” by Zalora in South East Asia) and delivering best-in-class mobile applications (e.g. Namshi in Middle East).
Lorenzo Grabau, CEO of Kinnevik, said, “The creation of GFG brings together five powerful digital brands led by a unique group of highly talented founders and managers. By operating as a single entity, Dafiti, Jabong, Lamoda, Namshi and Zalora will be even more effective in expanding their leadership positions in their respective marketplaces.”
The move is amied at improving global best practice sharing across functions, deliver economies of scale in sourcing international brands and marketing with global media channels, strengthen the private label efforts, enhance GFG’s ability to attract and retain top talent, accelerate development of technology platforms, and enable GFG to acquire a leadership position in growth market fashion e-commerce.
Per June 30th, 2014, GFG had 4.6m active customers and over 7,000 employees. For the first six months of 2014, GFG websites had 353m unique visitors, received 8.4m orders and generated EUR 436m of Gross Merchandise Volume. In 2013, GFG’s IFRS revenues amounted to EUR 406m.
Since launch in 2011 and 2012, the five e-commerce companies have attracted funding in excess of EUR 1bn from Kinnevik, Access Industries, Summit Partners, Verlinvest, Ontario Teachers’ Pension Plan, Tengelmann and a number of other investors. With approximately EUR 350m of cash as of 30 Jun 2014, GFG is very well capitalised to continue to execute on its plans and capture its growth opportunities.
Substantially all the direct and indirect shareholders in the five existing e-commerce companies will contribute their shares into a newly formed Luxembourg-based entity. The three largest shareholders in GFG will be Kinnevik, Rocket and Access Industries, with 25.1%, 23.5% and 7.4% ownership interests, respectively.
The GFG companies will continue to be led by their respective founders and management teams with a few select additions to the leadership team intended to foster group synergies and the pursuit of global initiatives.
The Board of Directors at GFG will include Lorenzo Grabau, CEO of Kinnevik as Chairman, Oliver Samwer, CEO of Rocket as Deputy Chairman and representatives of the other largest shareholders.
Rocket started in 2007 and now has more than 20,000 employees across its network of companies, which operate in more than 100 countries on five continents.