PLDT and Rocket Internet

Almost a month ago PLDT invested in Rocket Internet, an e-commerce company known primarily for bringing successful US e-commerce ideas outside of the US. An example of their products is Lazada which aims to be the Amazon of Southeast Asia.

Original investors 90.00%
PLDT 10.00%

Just a week later, United Internet also invested in Rocket Internet via new shares diluting PLDT’s share. Bummer. But hey, what can you do?

Original investors 80.70%
PLDT 8.60%
United Internet 10.70%

Now the Rocket Internet IPO draws near. The IPO will be done via new shares which will further dilute PLDT’s share. Again Bummer. But hey, again what can you do?

Original investors 61.33%
PLDT 6.54%
United Internet 8.13%
Public 24.00%

Well, I’m not doing anything. At the moment, that is. So maybe I can see how the IPO will impact PLDT’s value.

min mid max
IPO Price 35.5 39 42.5
Raised value (EUR B) 1.34 1.48 1.61
Existing value (EUR B) 4.26 4.68 5.10
Company Value (EUR B) 5.60 6.15 6.71
PLDT’s shares value (6.79%) 0.37 0.40 0.44
PLDT’s investment 0.333 0.333 0.333
0.03 0.07 0.11
Return 9.95% 20.79% 31.63%
Market Cap (PHP B) @close 9/29 690.00
Market Cap (EUR B) 12.04
Market Cap Impact 0.28% 0.58% 0.87%

It looks like the Rocket Internet investment is good (potentially 9.95-31.63%) but unfortunately it’s just a small part of PLDT’s overall asset portfolio and its post-IPO valuation will have little impact (0.28-0.87%). At the moment, that is.

PLDT’s investment includes strategic partnerships “to drive the development of online and mobile payment solutions in emerging markets” (that’s according to PLDT). That just might deliver dividends in the future that are not (yet) priced in.