The first ever public listing at the New York stock market for Africa’s largest e-commerce firm Jumia saw it getting the startup “unicorn” status which is a tech start-up that is worth $1 billion or more. Analysts feel that this could also lead to other tech start-ups on the continent taking the same strategy of going public in the United States.
The IPO put up just 17.6 per cent of the company for sale at $14.50 a share. Jumia is the first African tech startup to get itself listed on a Wall Street exchange.
The company enjoys a very dominant position in Africa and had been termed as “Africa’s Amazon”. It boasts of more than 4 million customers on the continent which has huge scope for growth because just 1 per cent of total retail sale here is done online.
Two French entrepreneurs founded Jumia in Lagos, Nigeria in 2012. Currently, the company is present in most of the African population such as in countries like South Africa, Tanzania, Egypt and Ivory Coast.
MTN, Africa’s biggest telecoms company is its largest shareholder.
The company is hoping that it would be able to raise $196m for shareholders and for future investment from the flotation on the New York Stock Exchange, the company said on Friday. The shares of the company priced at between $13-$16 each were being pitched by its financial advisers.
Jumia operates in 14 countries, including Kenya, Ghana, Algeria, Angola, and Senegal. The e-commerce platform deals in a wide range of products – from electronics to clothes. The company also has a takeaway food delivery platform and a hotel and flight booking website. The company does its online deliveries in Kenya through the French supermarket giant Carrefour.
Last year, there was a 40 per cent surge in the sales of the company to touch $147.3m.
The company however has not turned profitable till now and has lost about $1 billion since it was founded.
One of the advantages for Jumia is that it accepts mobile money payments throughout its business because few people in Africa posses credit or debit cards. However the continent itself faces a number of technical and infrastructure issues in the potential of growth of e-commerce.
Additionally, Jumia also faced tougher competition. Even while the company was busy launching its IPO, global logistics provider DHL launched a competing app which would allow consumers in 11 countries in Africa to purchase directly from global retailers in
Products from more than 200 American and British retailers would be available on the DHL Africa eShop platform and the company would delivering the products directly to the homes of the consumers which has been one of the major issues of Jumia.
However the positive message that the Jumia’s listing offered to other African start-ups was that it is possible for companies from the continent to get listed at a major stock market, said Erik Hersman, chief executive of Nairobi-based internet and software firm BRCK.
“It’s an important event in the evolution of the African tech scene,” he said.
(Adapted from BBC.com)