PLDT sees Rocket as proxy for global growth

Together they worked on the credit card provider's global mobile payments platform, intended to facilitate payment solutions in developing markets. The platform has expanded across Latin America, with services launched in Brazil and Argentina.

Now PLDT - whose wireless operations are run through Smart Communications - has taken another step in its quest to establish a multi-jurisdictional footprint. The company has bought a 10% stake in German e-commerce incubator Rocket Internet for EUR333 million ($444 million). It has also agreed to help develop payments and remittance infrastructure for Rocket's portfolio of emerging markets start-ups.

There are plenty of "unbanked, uncarded and unconnected" consumers in Asia and Rocket has incubated start-ups such as Zalora and Lazada that can claim to have gained traction in the region, particularly Southeast Asia.
But PLDT is consciously looking beyond its home markets. Beneath the Rocket mother ship lie regional holding companies and then the individual businesses themselves.

If PLDT were interested in consolidating its position as the Philippines' leading telecom provider - the company generated revenues of PHP168.3 billion - it didn't need to put money into the German parent.

"The operational plan is joint development of mobile payment technologies for deployment globally," said a source familiar with the transaction. "Rather than have a joint venture in Asia PLDT wants exposure to Latin America, Africa, Russia, and so on."

The investment, which will be structured as a subscription to new shares, is Rocket's first from an Asian strategic partner. The firm has previously worked with AB Kinnevik, Access Industries and Global Founders, all of which are from Europe or the US. While an Asian affiliation is helpful as the company aggressively expands its portfolio start-ups in the region, securing mobile payment expertise was a priority and Smart eMoney handled $4.5 billion in transactions last year.

"Financial technology is a key focus sector for Rocket and this partnership will allow us to build on PLDT's world-class innovations in mobile money and micro-payments and accelerate the delivery of those solutions around the world," said Oliver Samwer, founder and CEO of Rocket.

The transaction is also notable in that it values Rocket at EUR3.3 billion ahead of an IPO mooted for later this year - although PLDT's entry price is likely discounted, based on its expected contribution to the partnership.

The incubator claims to have industrialized the start-ups, thereby reducing the risk of failure, although it has drawn criticism for its rapid roll-out of cloned business models and equally rapid withdrawal if they don't work out. But Rocket has still created an emerging markets empire that employs 20,000 people across 100 countries with aggregate revenues in excess of EUR700 million.

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• Topics
• Venture
• Technology
• Financials
• Expansion
• Southeast Asia
• Southeast Asia
• Philippines
• TMT
• Financial Services
• Rocket Internet
• M&A