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Investors scream for joy at Zalando IPO plans

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AAAAAAAAAHHHHH! Photo:DPA
09:52 CEST+02:00
Online retail giant Zalando plans to go public on the Frankfurt stock exchange, hoping to do so before 2014 is out. The exact date has not yet been set, nor has an initial share price been announced.

"It depends on the market environment," said the Berlin-based company in a statement on Wednesday regarding the date of its initial public offering (IPO). The plan is to put 10 to 11 percent of the company on the market.

Financial insiders predict the IPO, one of the most highly anticipated in the Germany, could raise €750 million for its parent company Rocket Internet.

The news follows information that Zalando made a profit of €35 million, before taxes, interest and employee share options in the second quarter. The previous quarter saw a loss of €31 million.

"Reching break-even in the first half of 2014 is an important milestone, which underlines the attractiveness of our business model. Going public is the next logical step in the development of Zalando," board member Robin Ritter said in the release.

The company was last valued at €3.8 billion and boasts 13.7 million customers in Germany, Austria and Switzerland. Founded in 2008, Zalando posted a turnover of €1.8 billion in 2013, but it has yet to post a profit.

Its main investors are Swedish firm Kinnevik, and the investors Marc, Oliver and Alexander Samwer of Rocket Internet.

Zalando's parent company, Rocket Internet, operates in 50 countries and employ 20,000 people worldwide.

The company is not without controversy, as the startup incubator is known for taking existing ideas and replicating them for local markets. Zalando was modelled after US-based Zappos. Lazada, serving Indonesia, is a replica of Amazon.

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The model has proven successful: CityDeal, modelled after Groupon, was purchased by the latter for approximately €95 miilion, despite being valued at just €16.5 million at the time.

According to Forbes, the IPO of Zalando will make the Samwer brothers billionaires.

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