By Emma Thomasson and Nadine Schimroszik
BERLIN (Reuters) - Germany's Rocket Internet <RKET.DE> needs to hold on to its mountain of cash so it can compete with rivals from the United States and China and pounce when investment opportunities arise, the chief executive said in an interview.
The internet investor has a cash and equity warchest of up to 3.8 billion euros ($4.6 billion), but is under pressure to return part of it to shareholders to boost a stock price that is almost half the level it listed at three years ago.
Oliver Samwer, a serial entrepreneur who has become one of Germany's richest men through his savvy investments, said Rocket wanted to be ready to invest "several hundreds of millions" at once in 2018 or 2019.
"We believe capital is a very important instrument in the tech area. To build firms of a certain size, you need more capital than ever before," Samwer told Reuters on Wednesday.
He said U.S. and Chinese firms had access to much more capital.
Samwer noted that two years ago investors were concerned that Rocket might run out of cash due to funding so many loss-making start ups and now they were worried it had too much cash.
Founded in Berlin in 2007, Rocket started out with a focus on ecommerce, but it made a big bet on online food in 2015, which paid off last year with the listings of its biggest investments HelloFresh <HFGG.DE> and Delivery Hero <DHER.DE>.
However, that did little to help Rocket's own share price, with its current market capitalization of 3.8 billion euros implying that the market puts no value on its assets beyond its cash and its stakes in the two listed food firms.
Samwer noted that Rocket's share price has risen more than 10 percent since he spoke to investors in late November, but said he was still not satisfied with the stock, admitting that the company had made mistakes in the past over how it communicates.
"Rocket Internet is pursuing a complicated, perhaps also unique business model. Over time, the market will reward this because the figures of our investments are so good," he said.
He said it is not Rocket's plan "at the moment" to consider a delisting and declined to comment on possible new share buybacks after a current 100 million euro program.
Rocket is invested in more than 100 start-ups, including in financial and property tech, logistics and travel sites, with its stakes in the five biggest of them potentially worth more than 1 billion euros to Rocket, according to Berenberg bank.
"While we understand that investors may be reluctant to accord a platform value to Rocket ... we think the market is taking far too cautious an approach with this company," said Berenberg analyst Sarah Simon, who rates the stock "buy".
Samwer said he was currently focused on Rocket's online furniture sites Westwing and Home24, its Jumia ecommerce business in Africa and the travel sector.
He said the idea of merging Home24 and Westwing, floated by some observers, was a "pure game of make believe". He noted that the sites target different customers and markets.
However, he said consolidation was likely in coming years in the online food delivery sector, where Delivery Hero competes with Just Eat <JE.L>, GrubHub <GRUB.N> and Takeaway.com <TKWY.AS>.
Rocket Internet has a team of about 25 staff looking for new opportunities, scanning about 200-300 companies a month.
Samwer highlighted peer-to-peer lending marketplace Funding Circle, small business financing firm Billie and British home loans agent Nested as Rocket companies to watch.
"We are planting new seedlings so we can harvest them in 2020 and beyond," he said. "Small seedlings can suddenly grow big."
(Editing by Anna Willard)