Jumia intends to spin off its logistics and payments units and enter into new African countries.
This assertion was made by co-Chief Executive Officer Sacha Poignonnec in an interview as reported by Bloomberg. Sacha says it’s time to lay the groundwork for the next phase of growth.
This growth involves a spin-off of the logistics business which currently helps transport goods between buyers and sellers in 11 African countries, including Nigeria, Egypt and Uganda, and the payments business that allows them to settle transactions.
“We created something that does not really exist in Africa, which is an end-to-end logistics partner on the continent,” said Poignonnec. “We have built it from the get-go, so that one day we are in the position to carve it out if we want to.”
The stock has been doing well in the market and it has increased by more than 500% in the past 12 months, now trading around $36. The shares traded 1.4% lower in early New York trading on Thursday, valuing the company at about $3 billion.
The company has obviously weathered the storm it passed through just after it debuted on the stock market with its IPO. It was hit by claims by Citron that Jumia was a fraud and that its equity was worthless . The IPO went well, opening at $45, briefly rising 75% before plummeting to unprecedented lows.
The company had a change of mind recently going from bearish to bullish. “Their positioning in Africa alone (e.g., logistics, technology, employees, brand) should be worth minimum $7 billion or $100 per share,” Citron said in a new report.
Sacha also stated that the company was looking at launching in new countries even though it shut down operations in three African markets last year.
He said “Being pan-African enables investors to get exposure to the continent rather than one country, while partners such as wireless carrier MTN Group Ltd. and financial group Mastercard Inc. — which both invested in Jumia before the IPO — can work with the group across several markets.”
Other growth options include gaming and video streaming, said the CEO.
“No one questions the relevance of e-commerce as a business — and the opportunity in Africa is massive,” said Poignonnec. “Seven years ago, people were questioning how we are even going to do this, now the only question remains on profitability.”
