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Loss making African ecommerce giant Jumia files for NYSE IPO

African ecommerce giant Jumia has filed with the US Securities Exchange Commission (SEC) to launch an initial public offering (IPO) on the New York Stock Exchange (NYSE), despite reporting losses over the past two

Featured image: Jumia via Facebook
By on 14 March, 2019
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African ecommerce giant Jumia has filed with the US Securities Exchange Commission (SEC) to launch an initial public offering (IPO) on the New York Stock Exchange (NYSE), despite reporting losses over the past two years.

Jumia was founded in 2012 by Frenchmen Jérémy Hodara and Sacha Poignonnec. The company made history in 2016 when it got a valuation of just over $1-billion after it raised $326-million from investors who included US investment bank Goldman Sachs, MTN, Rocket Internet and AXA Insurance — effectively making it Africa’s first unicorn.

While the firm on LinkedIn states that it is based in Lagos, in its filing — made on Tuesday — it has it that the company is based in Berlin, Germany (home of Rocket Internet).

Jumia’s Securities Exchange Commission (SEC) filing mentions that the IPO will be led by Berenberg, Citigroup, RBC Capital Markets, and Morgan Stanley.

As of December last year, Jumia had accumulated losses of €862-million

A BBC report yesterday said the company could likely launch its IPO next month.

Ventureburn this morning sought comment from Jumia on how many shares it plans to sell, and how much each share will be priced, but had not received a response at the time of publication.

Jumia, which has operations across 14 countries on the continent, has diversified its services to include a vehicle as well as a property marketplace, food delivery, classifieds, online hotel bookings and a flight marketplace.

The firm grew its active consumers from 2.7-million in 2017 to 4-million in 2018, but despite this, it has been unable to turn a profit.

Losses raise concern

According to Jumia’s IPO prospectus, last year the firm reported a loss of over $195-million (on revenue of $149-million). In 2017, Jumia reported a loss of €165-million — about $187-million (on revenue of €94-million — about $106-million).

“As of December 31, 2018, we had accumulated losses of €862-million,” the firm said in the filing.

“There is no guarantee that we will generate sufficient revenue in the future to offset the cost of maintaining our platform and maintaining and growing our business.

“Furthermore, even if we achieve profitability in certain of our more mature markets, where e-commerce is growing rapidly, there is no guarantee that we will be able to break-even and achieve profitability in other markets, where e-commerce adoption is slower,” the firm added.

Last year Jumia’s losses widened to $195.2 million on revenue of just $149.6 million. The company, which operates in 14 African countries including Nigeria, Kenya, Morocco and Egypt, is also burning through cash with negative operating cash flows of $159.2 million.

— Aly-Khan Satchu (@alykhansatchu) March 13, 2019

They built their company from the get go to prepare for IPO so their metrics and KPIs have always been focused on that. However, they have not been good corporate citizens. People use Jumia but no one loves Jumia. I think this is reflected in their pretty scary financials.

— Rebecca Enonchong (@africatechie) March 13, 2019

Will main investors sell shares?

SA tech site Tech Central reported yesterday that MTN –Jumia’s largest shareholder with its 29.7% stake in the firm — had identified Jumia as one of the assets it could sell as part of the telco’s R15-billion asset disposal plan.

Ventureburn this morning also asked another of Jumia’s biggest shareholders Rocket Internet — which owns a 20.6% stake — if it plans to sell its shares in the firm when it goes public. However Rocket Internet had not responded by the time of publication.

Read more:Jumia, Rocket Internet still mum on whether African tech giant will list in US

Featured image: Jumia via Facebook

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Daniel Mpala
Daniel's focus is on the African tech startup ecosytem. Besides that, he is passionate about online security, privacy and international affairs. He studied International Relations and Media Studies at the University of the Witwatersrand. More

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