Investors have injected US$339 million lifeline into GFG, which owns the struggling Rocket Internet fashion websites.
Rocket Internet and others have sunk the euro 300 million into its Global Fashion Group, raising GFG’s valuation to €1 billion – which is about a third of what it was worth hardly a year ago, when it raised €150 million.
Launched in Luxembourg in 2014, GFG is a holding company formed from a merger of five eCommerce fashion companies – India’s Jabong, Latin America’s Dafiti, Russia’s Lamoda, Middle East firm Namshi, and Zalora (Southeast Asia and Australia).
GFG acting CEO Romain Voog says the financing will provide the group with the capital it needs to continue with its strategy of “building out its leading position” in the online fashion sector in emerging markets.
Rocket claims GFG’s performance has improved in the past year, easing its losses and raising its adjusted EBITDA margin. But it has been struggling to gain market share, and pulled out of Thailand and Vietnam, one of the fastest-growing eCommerce and internet markets in Asia.
And GFG’s Jabong business in India, considered the next big market after China, has reportedly been up for sale for months with its valuation eroded by a tenth in just a year. Meanwhile, rival eCommerce companies like Flipkart and Snapdeal have soared in value.
Voog is optimistic the reduced losses combined with this funding round will help accelerate the GFG’s path to profitability while it expands. A third of the €300 million raised came from Rocket. Swedish investor Kinnevik was also involved, along with existing shareholders.