Family office Verlinvest aims to close new e-commerce investments in APAC by next year

Nicholas Cator, Executive Director, Verlinvest Asia

Having made two e-commerce portfolio exits this year, Brussels-based family office Verlinvest SA is now scouting for more investments in the fast-growing niche in the Asia Pacific and other geographies.

Verlinvest sold its stake in US-based pet food e-tailer Chewy.com and Southeast Asia’s online shopping platform Lazada this year.

The family office, set up by one of the Belgian families related to brewer Anheuser Busch InBev NV (ABI), is meeting local players in Southeast Asia, US, India and Europe to try and re-balance the portfolio and find opportunities, Nicholas Cator, Executive Director at Verlinvest Asia, told DEALSTREETASIA in an interaction.

“We are definitely interested in looking at exciting opportunities (in e-commerce) in Southeast Asia, India, the US, and Europe to try and re-invest some of the proceeds of our successful Lazada and Chewy exits,” Cator said.

With an exposure to food and beverage, education and healthcare in the offline segment globally, the firm is keen to invest in specialized verticals or classifieds in these sectors. “What we are mostly looking for, on top of growth, is strong unit economics and customer metrics (high retention and repeat, improving cohorts, etc.) which lead to a clear path to profitability,” Cator noted.

In April this year, the investor sold its stake in Chewy.com to PetSmart in a deal valued at $3.35 billion. In June, Verlinvest exited its investment in Lazada, along with other investors including Rocket Internet, when Chinese e-commerce giant Alibaba pumped in $1 billion into Lazada to up its stake to 83 per cent.

“We are looking to do at least one investment in this (e-commerce) space next year (2018) in Asia. We are also looking actively at opportunities in Europe and the US as we would also like to do one or two investments in e-commerce in these geographies,” Cator said.

Verlinvest has been a backer in a series of e-commerce businesses globally which include UK-based Zalando, online pharmacy 111.com in China and Global Fashion Group which is known for its brand Zalora in Southeast Asia.

“Our main focus is on verticals in which we are also active in the offline world (food and beverage, pet food, ageing, healthcare and education), as we believe we can add value to our portfolio companies by giving them further insights into consumer trends and preferences and on how to best position their brand & customer experience to disrupt offline players,” Cator pointed out.

Southeast Asia has emerged as a coveted market for e-commerce players with China’s Alibaba, JD.com and Tencent spearheading the investment and acquisition spree in the region. The Chinese firms have funded both horizontal players and those in specialist spaces, with the latest investment being JD.com’s backing of Thai online fashion brand Pomelo.

“What we’re seeing is that the existing horizontal players have secured unassailable positions in all major markets (Amazon, Alibaba, JD, Lazada, Flipkart, etc.) and that these horizontal players will ultimately win in most categories. But we strongly believe that there will be opportunities in a few verticals to create stronger engagement & retention with consumers (vs. a pure horizontal player), through superior customer experience,” Cator said.

“We are therefore looking for vertical players, in sectors such as F&B, food delivery, fashion, healthcare or education who can differentiate by offering access to a curated assortment with unique and/or customized brands and products, specialized high-quality content and edits, strong private label, tailored aftersales / customer service, etc,” he said. The family office has also expressed interest in classifieds which it is actively looking at.

The firm, which invests between $25 million and $150 million per deal, prefers to participate in later rounds — Series B or C. As a long-term investor, it likes to come in early but with a view of deploying a minimum of $50 million over multiple rounds.

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