Deal in Focus: DN Capital et al. divest Quandoo

Tokyo-based Recruit Holdings, an information services and human resources company worth in excess of $10bn, bought out Quandoo's venture capital and angel investors in a deal worth €198.6m in early March.

Recruit initially acquired a 7.09% stake in Quandoo in October last year. Its corporate venture arm RGIP invested in the Berlin-based company's fifth funding round. "I think when they first made the investment in the company they were thinking about potentially buying it. They obviously really liked CEO and founder Philipp Magin, the rest of the management team and the sector, which they know very well," says Nenad Marovac, CEO of DN Capital.

Recruit already owns the Hotpepper Gourmet business, which provides restaurant information and discount coupons for the Japanese market. The combination of Quandoo and Hotpepper, covering Europe and Asia respectively, could provide a real challenge to the dominance of San Francisco-based competitor OpenTable.

Comparisons between the businesses come easily: OpenTable operates predominantly in the US, Canada, Mexico and the UK, as well as in key Quandoo and Hotpepper markets Germany and Japan. Founded more than a decade before Quandoo came into existence, OpenTable went public in 2009 and has seated 530 million diners at 30,000 partner restaurants. By contrast, Quandoo began operating in December 2012, launching in Berlin in April 2013. A year later, it had seated one million diners and was active in eight countries. The company's latest figures claim it has seated six million diners in 6,000 partner restaurants across 13 countries. "This has been one of the fastest company expansions we've ever seen – they launched in 13 countries at lightning pace," confirms Marovac. 

From London to Berlin
DN Capital was not the first investor in Quandoo. Before the launch of the app and website, and only two months after its founding, Atlantic Capital Partners, the Sixt family (owner of German car rental company Sixt) and several business angels provided seed capital worth $2m to the food services business. Holtzbrinck Ventures then led the company's $4.5m series-A funding round in June 2013.

"We were really impressed with Phillip Magin and the team he had put together," says Marovac of DN's decision to invest in Quandoo. "It's a killer team. Many of them had previously worked together before as part of Citydeal, which was sold to Groupon, and were Rocket Internet alumni. I had also been tracking Philipp for some time, so I was very happy to invest to support this team."

DN then brought fellow London-based venture capital firm Piton Capital in. The firm led Quandoo's $25m series-C, resulting in a total investment in Quandoo of $40m over four funding rounds. Following Recruit's investment a few months later, the management team held around 35% of the company, followed by Holtzbrinck Ventures with almost 21%. Both DN's and Piton's shareholdings were around the 10% mark. "We already received strategic interest in Quandoo within six months of our investment, so we were pretty sure we had a hot asset on our hands," reveals Marovac.

Recruit's all-cash buyout will see the management team continue to lead the company and the firm's 280 staff remain at the company's Berlin offices. Quandoo plans to expand across all continents, as well as provide additional methods for restaurateurs to engage with potential customers.

The past six months have been busy for DN, beginning with the final close of its third fund on €144m, exceeding its €100m target. Two DN portfolio companies, childcare product retailer windeln.de and online eyewear business Mister Spex, raised almost €100m in fresh capital from Goldman Sachs's Merchant Banking division. This was closely followed by the announcement in mid-January that audio recognition app Shazam had achieved a $1bn valuation.

Advisers
Vendor – Catalyst Capital (M&A).

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• DACH
• Exits
• Deal in focus
• DN Capital
• Top story
• Unq2015Apr