Brazil’s Petlove raises US$140 million, attracts Riverwood Capital, wants to build ecosystem

RIO DE JANEIRO, BRAZIL – Petlove, the largest Brazilian e-commerce company for dogs and cats, has just completed a R$750 (US$140) million round, led by the American manager Riverwood Capital. The house, with a great focus on technology, is the newest shareholder of the platform.

It is the Brazilian company’s second major step in less than five months. In April, Porto Seguro also debuted in the star-studded equity partner base by contributing its pet health insurance area to the business.

Now, Jayme Garfinkel’s insurer has joined the round, alongside the other partners, Tarpon and Softbank (the largest), as well as L Catterton and Monashees.

“This operation is very emblematic because it had the participation of all the shareholders,” highlights Pedro Faria, partner at Tarpon and chairman of the company’s board of directors, in an exclusive interview with Exame newspaper.

The manager joined the company in 2018 and became a kind of reference shareholder of the business. Now, Riverwood will also have a seat on the board of directors.

With the new capitalization, Petlove was valued at R$3.5 billion. “But that’s not the most important thing for us. No partner was selling its stake. On the contrary, everyone was buying more,” he added.

They all have an eye on the potential for growth and consolidation in the pet world, a market that is expected to move some R$40 billion this year – and which has been increasing at a recurrent double-digit rate.

The transaction will prepare Petlove for a major leap in its operations. “We now have approximately R$1 billion in cash,” says Talita Lacerda, company president to Exame. The pace of programmed expansion is to be envied. The company should end this year with revenues of R$900 million, compared to approximately R$ 500 million last year.

The 2021 volume includes all the brands and acquisitions made, such as DogHero, Vetus, VetSmart, and Porto. Pet, Porto Seguro’s pet health plan currently has about 50 thousand lives.

It is the company’s largest operation, and the volume is even higher than several initial public offerings (IPOs) held throughout 2020 and 2021 at B3. Joaquim Lima, managing partner of Riverwood, says that this is its first investment in the pet market.

“We see large companies like Mercado Livre and Magazine Luiza growing a lot by creating ecosystems around their e-commerce, and we believe that some verticals and categories are so specialized that they will have dedicated operations”, he said to Exame.

The thesis of the manager, according to the executive, is that the penetration of this category in the population is still low and that it will increase significantly.

The resources will accelerate new acquisitions, but they also have a certain destination of reinforcing the logistic and partner network and technology. “Today, 70% of our revenue comes from the feed subscription service. But we are investing in this front precisely for fast delivery to be able to offer all the other products and services that dogs and cats need and that are not necessarily recurring or programmable”, explains Talita.

Petlove’s goal is to become a reference for clients. “We usually say here internally that we want to mean ‘everything your pet needs when it needs it, and with an amazing experience’,” reinforces the executive.

The goal is to reach revenues of R$3 billion by 2024 – which means being bigger than the Petz group is today.

ECOSYSTEM

Petlove today offers fast delivery in five cities and should add eight more soon to this total. By planning, there will be 50 cities with the service by the second quarter of 2022. “We want to democratize access to products and services. This is the plan,” says Talita. “With the potential to reach all of Brazil,” adds Lima,

“But we are not going to be the bogeyman that kills the neighborhood stores and small entrepreneurs. On the contrary. We want to offer digital tools to empower these partners and more veterinarians, dog walkers, and various service providers,” explains Pedro Faria.

With the acquisition, the technology team, which currently has 90 people, will double and reach 180 professionals. The company’s fast delivery system will work together with the stores and neighborhood units, like a marketplace, but in which the end-user only sees Petlove.

IPO

Lima explained that the entrance in the company also aims to make the business grow substantially before it is taken to the stock exchange, which can be the B3 or even Nasdaq. However, there is no ongoing project in this direction, not even the hiring of bank advisors. “It is something for two or three years. All focus now is on expansion.”

Although it had already attracted attention, the segment entered the investors’ sights once again after the listing of Petz. The company debuted on the Brazilian stock exchange in September 2020, valued at R$5.1 billion. Even before completing one year as a public company, it has more than doubled in value. On Friday, it was worth R$11 billion on the São Paulo trading floor.

Everything indicates that it won’t be long before Brazil has a pet population larger than that of people. Today, it is already the second-largest animal market in the world.

According to data from IBGE, updated by the Pet Brazil Institute, the country had almost 140 million pets in 2018 (including fish, birds, and reptiles) for a population of 213 million people. Of all pets, 90 million were dogs and cats, and more than 25% are in São Paulo.

Source: Exame