Jumia’s listing on the New York Stock Exchange (NYSE) will create more awareness to foreign investors on Africa’s technology ecosystem and wake up other players to see the benefits of listing internationally or locally to raise substantial capital for business growth, experts say.
The African tech and e-commerce company with operations in 14 different African countries, including Nigeria, which now trades as JMIA on the NYSE, is now valued at over $3.76 billion, after recording a trading price of $40.07 by close of business on Wednesday and opened at $38.15 on Thursday morning. With potentials of raising over $216 million fresh investments from going public, Jumia is leading the way for other African tech companies looking to raise funds for expansion.
“The Jumia IPO shows that Africa is innovative in terms of technology and this will spur other tech companies to also look into being listed,” said Tolulope George-Yanwah, country manager, Jumia Services.
George-Yanwah, who spoke with journalists at a press briefing on the latest IPO listing in Lagos yesterday, said the company had always been an example for others as a result of its forward-thinking decisions.
“We have made sure that other companies have been able to rise up and say we want to also be a part of e-commerce, we want to do retail online. There are a lot of people doing social commerce now, and all of this is because Jumia started in this market seven years ago,” she said.
On whether there are plans to list on the Nigerian Stock Exchange (NSE), Ernest Eguasa, chief financial officer, Jumia Nigeria, said there were no plans yet for the company to list its Nigerian unit, adding, however, that it was not an impossibility.
“At this point, there is no ongoing secondary offer that the company is considering. However, when a company goes to a stock exchange, there is no rule that it has to do a single listing. It really depends on what the company is trying to achieve; so, there is nothing stopping us from listing in a secondary market. However, there are no plans for us to list yet in Nigeria,” Eguasa said.
Although market analysts say Jumia shares are overvalued for a loss making business, but Olamide Amosun, head, engagement marketing, Jumia Nigeria, told BusinessDay, “At this point in time, we are not able to comment on whether or not the Jumia shares are fairly priced, at $14.50 per ordinary share.”
On its current loss and plans to turn profitable to satisfy investors, Jumia said it was growing rapidly, referencing the registration statement that showed that in 2018, Jumia delivered Gross Merchandise Volume (GMV) growth of 63.3 percent and its revenue from third party sales grew by 121.5 percent, for the last two years. Jumia has also delivered positive platform contribution at group level, and for Nigeria, which is the company’s biggest market, it has recorded positive contribution after all fulfilment expenses during the second half of 2018.
The company however says it cannot give any assurances that the business will yield return on investments for shareholders.
“We can’t make any forward projections, but Jumia is growing quite fast and we would continue to expand operations, but in terms of a definite assurance or forward statement on future performances, we can’t do that as a public company,” Orumwese said.
George-Yanwah debunked claims that MTN, which is a major shareholder in the company, might be looking to divest. According to her, the IPO is all primary, which means that its point is to attract new investors, our current shareholders are not looking to divest.
“The whole point of the IPO is to help raise more resources and capital, and funds raised will be used as the company deems fit,” she said.
Jumoke Akiyode-Lawanson
