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BERLIN (Reuters) - Germany's Rocket Internet needs to hold on to its mountain of cash so it can compete with rivals from the United States and China and pounce when investment opportunities arise, the chief executive said in an interview.
The internet investor has a cash and equity warchest of up to 3.8 billion euros ($4.6 billion), but is under pressure to return part of it to shareholders to boost a stock price that is almost half the level it listed at three years ago.
Oliver Samwer, a serial entrepreneur who has become one of Germany's richest men through his savvy investments, said Rocket wanted to be ready to invest "several hundreds of millions" at once in 2018 or 2019.
He said U.
S. and Chinese firms had access to much more capital.
Founded in Berlin in 2007, Rocket started out with a focus on ecommerce, but it made a big bet on online food in 2015, which paid off last year with the listings of its biggest investments HelloFresh and Delivery Hero.
However, that did little to help Rocket's own share price, with its current market capitalisation of 3.8 billion euros implying that the market puts no value on its assets beyond its cash and its stakes in the two listed food firms.
Samwer noted that Rocket's share price has risen more than 10 percent since he spoke to investors in late November, but said he was still not satisfied with the stock, admitting that the company had made mistakes in the past over how it communicates.
He said it is not Rocket's plan "at the moment" to consider a delisting and declined to comment on possible new share buybacks after a current 100 million euro programme.
Rocket is invested in more than 100 start-ups, including in financial and property tech, logistics and travel sites, with its stakes in the five biggest of them potentially worth more than 1 billion euros to Rocket, according to Berenberg bank.
"While we understand that investors may be reluctant to accord a platform value to Rocket ... we think the market is taking far too cautious an approach with this company," said Berenberg analyst Sarah Simon, who rates the stock "buy".
He said the idea of merging Home24 and Westwing, floated by some observers, was a "pure game of make believe". He noted that the sites target different customers and markets.
"We are planting new seedlings so we can harvest them in 2020 and beyond," he said. "Small seedlings can suddenly grow big."
($1 = 0.8330 euros)
(Editing by Anna Willard)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)