How venture investor Rocket Internet came back to Earth

One thing to start: Jean-Charles Naouri, the chief executive of heavily indebted grocery group Casino, has been questioned by French financial investigators in connection with a case examining allegations of financial manipulation and insider trading at the retailer.

In today’s newsletter:

Rocket Internet’s search for gravity

Rocket Internet has developed a reputation as one of the most aggressive financiers for European start-ups. The Berlin-based investment group’s chief executive, Oliver Samwer, once told colleagues to adopt “blitzkrieg” thinking in order to gain market share.

But in recent years, Rocket has undergone a quiet transformation that leaves it a far more complex and conservative investor today, DD’s Ivan Levingston and the FT’s Laura Pitel report.

Rocket’s “start-up factory” has been a poster child of the European technology scene since 2007, when the three Samwer brothers — Oliver, Marc and Alexander — launched the venture in Berlin with a ruthless plan: take Silicon Valley’s best ideas and repackage them for the European market.

They’ve made a fortune by backing the likes of meal-kit maker HelloFresh and online retailer Zalando before they went on to hold initial public offerings at multibillion valuations such as Delivery Hero in 2017.

But a contentious process to leave the stock market after its share price halved in 2020 has landed it on the bad side of even more investors than the ones whose portfolio companies they’ve been . . . inspired by. 

Its offer to buy shares below their trading price didn’t go over well with activist investor Elliott Management, which amassed a blocking stake. When Rocket eventually triumphed, it had to pay nearly double its initial offer with a special sweetener for Elliott.

“The reputation just completely got shattered,” said one Berlin-based tech executive on the delisting saga. “They behaved very badly on the capital market.”

But things have been changing ever since Samwer consolidated his control over the group and began pushing Rocket into new directions such as building out debt and public equity units that have become new sources of profits. The debt unit, Global Growth Capital, has made deals such as lending more than £100mn each to financial technology companies Revolut and SumUp.

Its hiring activity has also cooled dramatically since the pandemic tech boom. Samwer has gone so far as to disband the team behind his Flash Ventures strategy, which invested roughly €30mn into start-ups at their very earliest stages of development for a large stake.

In total, Rocket’s staffing levels have been slashed, while Samwer has warned his portfolio companies to ensure they have cash for much longer than the two-year consensus among other venture capitalists.

Those close to Samwer said that Rocket’s pivot has come alongside personal changes, even as he keeps close tabs on the business.

“He just turned 50. He has loads of money,” said one former executive. “He wants to spend time with his family, ski in Alaska and kitesurf.”

Wall Street awaits a cruel summer 

As bonus season came round at Goldman Sachs near the end of 2021, a bestowal of less than 40 per cent of a banker’s salary would signify below-par performance, a person briefed on the bank’s plans told the FT at the time.

The way things are going now, such a bounty might only be expected in the case of an M&A miracle.

Goldmanites will now be happy just to cling to their jobs at all as they brace for more job cuts at the Wall Street investment bank following a separate round of 3,200 cuts announced in January.

Managers tasked with letting go of their ranks earlier this year described it as “brutal” and morale as “horrendous”. Behind closed doors at a February conference in Miami, Goldman boss David Solomon told the bank’s partners that he probably should’ve started letting go of people earlier.

Nearly four months later, Goldman’s fortunes have further faded along with the higher-ups’ suntans from the Magic City summit.

Goldman Sachs is preparing for “a tougher environment” by cutting more employees, the bank’s president John Waldron warned on Thursday. 

The bank hopes to save $600mn by cutting 250 jobs across the bank, primarily at the managing director level. It may also consider another round of performance-based reductions in September.

The moves come after Goldman’s investment banking revenues fell 26 per cent in the first three months of 2023 from the year prior amid dealmaking’s weakest start in a decade.

It’s not alone: Morgan Stanley cut several thousand jobs this month, while Lazard prepares to cut 10 per cent of its staff over the course of this year and grapples with an uncertain future.

As Wall Street’s biggest rainmakers find ways to preoccupy themselves during the dealmaking drought — perhaps by buying summer camps, in Solomon’s case — their underlings are bracing for a summer of pain.

Job moves

• Trian Fund Management co-founder and chief investment officer Ed Garden is stepping down, per The Wall Street Journal. Trian’s co-heads of research, Josh Frank and Matt Peltz, the son of co-founder Nelson Peltz, will become co-CIOs. 

• EY has promoted 966 new partners.

• The CBI has warned staff of a wave of job cuts as the scandal-hit UK business lobby group prepares to slash its wage bill by one-third after members quit in droves over allegations of serious sexual misconduct.

• Paul Hastings has hired Kenneth Deutsch as a partner and global co-chair of its entertainment and media practice. He joins from Latham & Watkins.

• KKR is moving a Mumbai-based managing director Prashant Kumar from India to Singapore to lead its south-east Asia private equity arm, per Reuters.

• Freshfields Bruckhaus Deringer has hired bankruptcy lawyer Guilhem Bremond as a partner in Paris. He joins from Paul Hastings.

Smart reads 

Where’s the waste? An estimated 117,000 tonnes of electronic waste is illegally shipped out of Britain, so the FT fitted trackers in old laptops to shed light on the informal waste trade.

Miami’s condo king From Porsche elevators to a “Toto-in-all-bathrooms” loo policy, real estate aficionado Gil Dezer won’t stop building luxury towers in Miami. But is he immune to the boom-and-bust market? The FT’s Joshua Chaffin investigates.

Show me the money Apple’s partnership with Goldman Sachs was marketed as simpler banking. But some customers say they’re having trouble withdrawing savings, The Wall Street Journal reports.

News round-up

Beijing calls on Arm to intensify chip co-operation with Chinese companies (FT)

Investors turn to AI-guided dealmaking to gain edge over rivals (FT)

BHP to pay $280mn after underpaying 30,000 staff for years (FT)

Lucid raising $3bn with more money from Saudi owners (Bloomberg)

SVB Securities prepares management buyout backed by Baupost (Wall Street Journal) 

Sotheby’s buys historic New York building in near $100mn deal (FT)