Culled—Proshare
March 13, 2019
From Renaissance Capital with additional reporting from Qz
Highlights
- Accumulated losses – €862 million
- 2018: €170m loss on €130m revenues
- 4million ‘active customers’
Jumia, an African e-commerce platform backed by MTN and Rocket Internet, filed on Tuesday with the SEC to raise up to $100 million in an initial public offering.
However, the deal size is likely a placeholder for an IPO that we estimate could raise $500 million. The Berlin, Ger
many-based company was founded in 2012 and booked $147 million in sales for the 12 months ended December 31, 2018.
It plans to list on the NYSE under the symbol JMIA. Jumia filed confidentially on November 19, 2018. Morgan Stanley, Citi, Berenberg Bank and RBC Capital Markets are the joint bookrunners on the deal.
No pricing terms were disclosed.
A Landmark First; Risk Factors Highlighted
The intended IPO is a landmark first for e-commerce and tech businesses on the continent. It could also mark a possible exit by Rocket Internet, Jumia’s German parent company, divesting its remaining 28% stake in the company.
As part of its pitch to shareholders, Jumia cites itself as “the only e-commerce business successfully operating across multiple regions in Africa” with four million active customers of December last year.
That status is the result of a reshuffling as several of Rocket Internet’s African online businesses across food delivery, real estate, hotel and flight bookings were reorganized under the Jumia brand in 2016—the same year it reached a billion-dollar valuation after an $83 million investment from insurance company AXA for an 8% stake. It also notes its add-on services including Jumia Logistics, its product delivery arm, and Jumia Pay, its payments solution, as added assets.
But its SEC filing documents also show the company’s pan-African model has so far seen hundreds of millions of dollars in losses mounting each year by far exceeding revenue the company has been able to generate. As of Dec. 31 2018, the filings show the company has accumulated losses of nearly $1 billion.
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.
As part of its “Risk Factors” for potential investors it cites the continued losses as a lack of guarantee that it will “achieve or sustain profitability” or “pay any cash dividends” in the foreseeable future. While being transparent about potential risks is standard with S1 filings for initial public offerings, Jumia’s will give some investors pause.
The continued losses are only one of the numerous risk factors the company lists, including political instability and regulatory uncertainty in African markets. The company also claims competition and “more aggressive pricing policies” from rivals including South Africa’s Takealot and Egypt’s Souq.com could negatively impact its business.
Credits
The post African e-commerce platform Jumia files for an estimated $500 million US IPO originally appeared on IPO investment manager Renaissance Capital’s web site renaissancecapital.com.
