Jumia targets New York IPO
African online retailer Jumia is planning an initial public offering in New York in 2019 that could value the business at about $1.5bn, according to people familiar with the matter.
African online retailer Jumia is planning an initial public offering (IPO) in New York in 2019 that could value the business at about $1.5bn, according to people familiar with the matter.
Jumia’s largest shareholder, MTN Group, is planning to raise as much as $600m from selling its shares through the IPO, said one of the people, who asked not to be identified as the information is not public.
MTN and Jumia declined to comment.
MTN has been weighing a listing or private sale of its shareholding in Jumia, people familiar with the matter said in August 2018.
An IPO in the US would catapult Nigeria-based Jumia into the global spotlight after seven years of rapid growth across Africa. It provides an Amazon.com-like service and has platforms in 13 countries.
Jumia is a rare so-called unicorn in Africa — a recently launched private company valued at more than $1bn — being one of only three, research firm CB Insights says.
TWO-THIRDS OF AFRICA’S 1.2-BILLION PEOPLE STILL LACK ACCESS TO THE INTERNET, PROVIDING MUCH POTENTIAL FOR SALES GROWTH
The company was set up by French entrepreneurs Sacha Poignonnec and Jeremy Hodara in 2012 to take advantage of rising internet use on the world’s least-connected continent, as well as a lack of availability of items such as designer watches and sunglasses in Lagos stores.
Jumia will tell potential investors that two-thirds of Africa’s 1.2-billion people still lack access to the internet, providing much potential for sales growth and profitability, said one of the people.
Internet giants such as Alphabet’s Google and Facebook are among those striving to extend connectivity to the more remote and poorer parts of the continent.
MTN could be selling Jumia in New York at about the same time as an IPO of its Nigeria unit in Lagos, a move the carrier agreed to as part of a $1bn regulatory fine in 2016.
The listing in Lagos will be done in two stages, with an introductory listing in the first half of 2019 followed by a selldown of its majority stake, CE Rob Shuter said in a recent call with investors.
A successful listing of both Jumia and the Nigeria unit could help MTN reduce debt, which increased to R69.8bn in June from R57.1bn at the end of 2017.
The rising liabilities and a dispute over nonpayment of back taxes in Nigeria is weighing on the company’s share price, which has fallen by almost a third in the last 12 months.
The stock traded 0.8% lower at R85 by the close in Johannesburg on Friday, valuing the company at R160bn.
Other Jumia shareholders include Goldman Sachs Group, Millicom International Cellular, Orange and Africa Internet Group, a venture backed by Goldman, MTN and Rocket Internet.