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Jumia targets expansion with New York IPO

...As MTN set to exit retail business


Africa’s first Tech Unicorn, Jumia has filed for a New York Initial Public Offering to raise funds which it says would help the business take advantage of a growing market in Africa while it faces the imminent exit of largest shareholder, MTN Group.

Amid a loss of 170.4 million euros ($192.4 million) in 2018, compared with 165.4 million euros in 2017, the e-commerce firm believes that increasing internet penetration and smartphone adoption presents an opportunity for expansion ahead of competition.

“We intend to benefit from the expected growth of e-commerce in Africa through the investments that we have made and the extensive local expertise that we have developed since our founding in 2012,” Jumia said.

Jumia’s competition includes in Egypt, a company affiliated with Amazon, Konga in Nigeria or Takealot, Superbalist and Spree in South Africa, which may seek to intensify their investments where they operate and also expand their businesses to new markets.

Asides the local players, the possibility of global players like Alibaba and Amazon, eyeing the continental market, as well as other payment and transactions platforms including debit and credit card service providers, threatens intense competition for Jumia.

Consequently, the online retailer is pushing for an IPO in New York which is being led by Morgan Stanley, Citigroup, Berenberg and RBC Capital Markets in what experts believe could see Jumia’s valuation reach at least $1.5 billion.

Although the number of shares and the price being offered have not been disclosed, the move to go public, if successful, would see Jumia as Africa’s first startup on the New York exchange.

Formerly Africa Internet Group, ex McKinsey consultants, Jeremy Hodara and Sacha Poignonnec founded Jumia along with Tunde Kehinde and Raphael Kofi Afaedor in 2012.

Four years after, Jumia emerged Africa’s first unicorn when it was valued at $1 billion.

The e-commerce headquartered in Lagos, Nigeria, expanded operations into Morocco, South Africa and Egypt in 2012 and currently operates in 14 African countries including Uganda, Ivory Coast, Tunisia and Tanzania.

As at the end of 2018, Jumia boasts of a customer base of 4 million Active Consumers, up from 2.7 million Active Consumers as of December 31, 2017.

The online retail giant’s platform includes Jumia travels, Jumia food, Jumia pay, and Jumia deals although it sold off Jumia house Nigeria and Jumia house Ghana in 2017.

Jumia says it makes its money from commissions received from third parties, direct sales of goods, fulfilments; fees settled upon delivery of goods purchased on the Jumia platform, marketing as well as other value-added services it offers.

Gross Merchandise Value (GMV) increased by 63.3% to €828.2 million in 2018, mainly due to a 74.7% increase in GMV from third-party sales with particularly strong contributions from West Africa and Egypt, Jumia revealed.

‘’ The increase in GMV led to an increase in revenue by 38.9% from €94.0 million in 2017 to €130.6 million in 2018 ‘’ the company said.

Meanwhile, MTN Group which holds 31.28 per cent shares in Jumia, last week revealed that it would be selling off its interest in the online retailer alongside some other businesses in what is to be a $1 billion asset-disposal plan.

Other shareholders in Jumia include Rocket Internet, Millicom International, AXA Africa Holding and Goldman Sachs.



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