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Rocket Internet’s announcement of Foodpanda’s sale yesterday certainly caught most of us by surprise. There hadn’t been persistent rumors of a sell-off, unlike all the chatter before the Alibaba-Lazada deal earlier this year. Foodpanda had also largely escaped the intense scrutiny that’s been subjected to most of Rocket’s startups this year – with its fashion stores the most culpable.

That’s not to say it was all smooth sailing for the takeaway meals conglomerate. It tried in vain to find a buyer for Foodpanda’s Indonesian arm, eventually shutting down after finding it impossible to compete against Go-Jek. It was a similar situation in Vietnam where Foodpanda closed shop abruptly, with a terse announcement a few days later saying it’s sold the business to local rival Vietnammm.

But all in all, the service, which spanned 22 countries, was generally viewed as a Rocket Internet bet that might just work. After all, it went on an acquisition blitzkrieg just two years ago and fattened up with a colossal US$210 million in additional funding a few months later.

So why the surprise announcement yesterday? We’ve identified five possible reason Rocket Internet washed its hands of Foodpanda.

1. Was it running out of money?

Rocket’s financials for the first nine months of the year, released last month, make for some interesting reading.

Foodpanda managed to reduce its losses significantly as compared to the previous year – registering an improvement of almost 40 percent. But cash it had in the bank was dwindling fast – it went down from US$99.7 million in 2015 to US$60.7 million in September.

Let’s keep in perspective that these were Rocket Internet’s results for the first three quarters, not the entirety of 2016. It’s possible that Foodpanda burned through even more cash as the year drew to a close. If this was indeed the case, then alarm bells must have been sounding within senior management – forcing their hand and actively seeking out a deal.

2. Loosening grip in Asia

Rocket Internet has long touted itself as a trailblazer, fearlessly entering peripheral countries and building a market for its internet businesses where none existed. This first-mover advantage helped the German firm with visibility and media attention, but, as it found out in India, well-funded competition wasn’t too far away.

It may have saved its high-stakes bet in Lazada by the skin of its teeth, requiring the assistance of a third-party to snare the deal, but there was no guarantee of its other businesses finding similar saviors when the cash dried up.

And Foodpanda had definitely been feeling jittery in Asia. It repeatedly denied that it was looking for a buyer in Indonesia, reportedly for as low as US$1 million, only to confirm the huge loss via a statement on its website in October. The sale of its Vietnamese operations was in mysterious circumstances too.

With Uber Eats launching in Tokyo, Singapore, and Dubai, Deliveroo opening for business in both Singapore and Dubai, and local apps delivering knockout punches in India, Foodpanda knew it had to make some tough decisions in the near future. A lack of appetite to engage in a drawn-out battle could have been a key reason to seek out a buyer while there was still a chance.

3. It already sold a meaty chunk

Foodpanda’s sale of its Russian operations for US$100 million in cash may have been an indication of what lies ahead.

A Foodpanda spokesperson had confirmed to Tech in Asia in August that its operations in Central Europe (including Russia) were profitable. Precise data is impossible to obtain from an opaque company like Rocket Internet, but it’s likely that the business was sold at a substantial profit.

With investors finally getting something for their troubles, they may have given the go-ahead for Foodpanda’s eventual acquisition in an all-stock deal. After all, they stand to earn massive cash windfalls if Delivery Hero goes public or is acquired.

4. The elusive IPO

Ever since Rocket Internet’s own initial public offering in 2014, the pressure has been on the Samwer brothers to successfully list some of their biggest startups.

The initial candidate, according to analysts, was HelloFresh, a grocery box delivery company that’s present primarily in Western markets and one of Rocket’s most-funded startups. It was valued at US$2.9 billion in September 2015.

But HelloFresh saw losses spike throughout 2016 with profitability some distance away. Its IPO isn’t on the radar yet.

At the same time Rocket Internet was being pilloried by analysts and investors who questioned its spray-and-pray approach, high employee turnover, and opaque financial structures. Oliver Samwer, Rocket’s CEO, stuck to his mantra that “three or four” startups would be profitable by 2017 but he’s consistently avoided naming names.

A large IPO for one of Rocket’s portfolio companies would go a long way in allaying concerns about the copycat incubator. Delivery Hero wasn’t started by Samwer, but he did make a shrewd investment in the goliath in 2015. By clubbing together Foodpanda, the new company now has a truly global footprint – one that spans almost 50 countries.

Rocket Internet’s stake in Delivery Hero is currently 37.7 percent – fully diluted – which means further investment rounds won’t reduce its stake at all. The most likely exit seems to be via an IPO, with Bloomberg also predicting in October that this may be a course of action in the months ahead.

This eventuality could be why Foodpanda’s sale was taken in such haste.

5. Breathing space

2016 hasn’t been kind to Rocket Internet. Not only did it post a colossal US$700 million loss, it also saw the collective value of its fashion stores shrink by US$2.4 billion. Its shares are currently worth half of what they debuted at in 2014.

Rocket isn’t totally immune to all the talk about a funding winter and jittery investor sentiment, despite its unprecedented ability to keep securing obscene amounts of cash.

The sale of Foodpanda, one of Rocket’s largest portfolio startups, would help the Samwer brothers take a step back and concentrate on problems that need the most attention. Such as the Global Fashion Group, which is bleeding money like nobody’s business.

Rocket Internet now sits on a pretty cash pile of US$1.7 billion but it defies logic to keep throwing in good money after bad. Foodpanda’s sale would have provided some sparks of cheer to help usher in the new year and boost confidence overall.

That’s because it’s pivotal for Rocket to hit the ground running in 2017. Troubles in its fashion ecommerce stores aren’t simply just going to go away – and if the Samwers don’t figure out a solution quick, it could prove to be a massive bottleneck towards overall profitability and health.

This is an opinion piece.

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