Foreign funds pour $1bn into Kinnevik While some fund managers are waiting patiently for Europe's next big technology listing, others are jumping the queue. Non-Swedish funds have bought an estimated $1bn in shares in Kinnevik, the venerable family-run Swedish investment company, over the past year, seeking to gain exposure to Zalando, Europe's biggest online clothing retailer by sales. Kinnevik is the largest outside investor in Zalando - which is modelled on Zappos, the US online shoe retailer - as well as Rocket Internet, the German clone factory from which it emerged. "It's only one and half years ago that people did not want to talk about [our] online assets," said Mia Brunell Livfors, Kinnevik's chief executive. Now they really want to talk about them. Zalando, which recently launched in the UK and several other European countries, is expected to seek an initial public offering within the next year. In the meantime, Stockholm-listed Kinnevik has become a rare route for public markets investors to take venture capital style risk. That strategy - which has pushed shares in Kinnevik up 50 per cent this year - has been out of favour since the dotcom boom, when several listed internet incubators burst. Foreign funds" investment in Kinnevik reached 45.8 per cent in June, up from 28.6 per cent a year earlier, according to the SIS Ownership service. That represents an investment of approximately $1.1bn, according to calculations by the FT based on average share prices in the period. "US and UK investors are more accustomed to online business models," said Elias Porse, an analyst at Handelsbanken. It's not only growth - it's also emerging market exposure [through Rocket's businesses]. The biggest rise in foreign ownership came in the second quarter of 2013. Analysts say many investors are hedge funds that have offset their exposure to Kinnevik's public holdings such as telecoms group Millicom by short selling those stocks. Founded in 1936, Kinnevik first invested in Rocket Internet four years ago, reportedly after its chairman, the heiress Cristina Stenbeck, met one of the Samwer brothers behind the incubator. Unlike a venture fund, Kinnevik has little operational control over Rocket or its portfolio companies. "When they talk about Zalando or Rocket, it's our view that they treat them as [only] a financial commitment," said Niclas Hegland, an analyst of Swedbank. However, portfolio companies welcome Kinnevik's long-term stance. "When they pick a winner that's sustainable, they can put more money than a venture capital fund might do," said Stefan Smalla, chief executive of Westwing, an online furniture retailer which has received investment from the company. Kinnevik values its stakes in Rocket and Zalando at £1.4bn, twice the companies" trailing sales. Some analysts view this as conservative, arguing that an initial public offering would generate a much higher multiple. However, others point out that Zalando remains lossmaking, unlike its UK rival Asos, and Kinnevik only releases sales numbers for the site after several months. "That's not a strong sign for a listing," said Mr Hegland of Swedbank. Expectations are running high and I'm not sure they'll be able to deliver.