Jumia Technologies shares soared by 75% on their first day of trading in New York, as investors rushed to buy into the company’s plans to extend online shopping services across Africa.
The stock traded at US$25.46 as of 4.34pm local time on Friday, valuing the company at more than $1.9-billion. Jumia earlier raised $196-million with the sale of 13.5 million American depositary receipts at $14.50 each.
The listing caps seven years of growth for Jumia, which was founded by 38-year-old French entrepreneurs Sacha Poignonnec and Jeremy Hodara in 2012 and now has more than four million customers in 14 African countries. While the retail platform isn’t profitable, sales jumped by almost 40% last year to €130.6 million.
“This is about awareness,” Poignonnec said in a phone interview. “Millions and millions of Africans are yet to realise the benefits of e-commerce.”
The company has headquarters in Berlin and got early funding from German start-up incubator Rocket Internet, while its biggest shareholder is MTN Group, Africa’s largest mobile phone company. More recent investors include French drinks maker Pernod Ricard and Mastercard, which put in a combined €125-million in the build up to the initial public offering.
Often tagged Africa’s Amazon.com, Jumia operates in countries such as Nigeria and Ivory Coast where the US giant lacks distribution infrastructure and much presence. The company has developed a logistics arm that includes pick-up and drop-off points to combat vague addresses, and also lets customers make mobile phone-based payments if they don’t have access to banking services.
‘Favourable long-term trends’
“It’s an opportunity for retail investors to buy the Africa growth story, the story of a growing consumer class,” said Steven Grin, managing partner of Lateral Capital, a New York-based investment company focused on Africa. “Rising per-capita incomes, an increasingly young and urban population, falling Internet and data costs, surging mobile phone penetration — these favourable long-term trends underpin the rise of the African online consumer.”
The offering was led by Morgan Stanley, Royal Bank of Canada, Citigroup and Berenberg Capital Markets. Citadel Securities was the designated market maker.
Poignonnec and Hodora met while colleagues at McKinsey & Co, with the former spending time in Ivory Coast working for the US consultancy.
“E-commerce is becoming very big everywhere,” Poignonnec said. “We looked at the opportunity in Africa. It’s a big opportunity to help buyers and help sellers.” — Reported by John Bowker, (c) 2019 Bloomberg LP