MTN is Reportedly Considering Selling Off its 40% Stake in Jumia

According to reports by Bloomberg sources, South African telecom group, MTN is said to be considering selling off its stake in Africa’s online retailer, Jumia.

“MTN Group Ltd. is exploring a sale of shares in African online retailer Jumia, according to people familiar with the matter,” Bloomberg wrote.

The company is said to be considering two options with the first one being listing Jumia. “Africa’s largest wireless carrier is considering an initial public offering of the Amazon.com Inc.-style business on the Nasdaq or New York Stock Exchange,” Bloomberg.

Apparently, it isn’t only MTN considering this option as German Incubator, Rocket Internet, which owns a minor stake in the company, is considering the option too. “Smaller investors such as German startup backer Rocket Internet SE are also open to selling stock,” Bloomberg.

This won’t be the first time the possibility of listing Jumia has been tossed around.

Earlier this year, Reuters reported that Rocket Internet was considering listing the internet company. The listing was said to take place either later in 2018 or 2019. Though the exchanges in consideration were Frankfurt or London.

The second option that MTN is looking to use to offload its stake is through looking for a private investor. Though this is not likely to be from the existing ones. “Another option under consideration is a private sale of shares to new investors, according to the people,” Bloomberg.

Though, in an email exchange on Thursday with MTN’s spokewoman, she told Bloomberg that the company “currently has no plans to dispose of its investment in Jumia in the short-term.”

MTN is the biggest shareholder in Jumia with a 40% stake and the company currently values the internet company at $1 Billion. According to Bloomberg, Jumia “has grown sales by between 70 percent and 90 percent annually since its inception in 2012”.

The telecom company could be exploring the idea in search for liquidity.

According to Bloomberg, MTN is hoping that listing Jumia can help reduce its debt. “A successful listing could help MTN reduce debt, which increased to 69.8 billion rand ($4.8 billion) at the end of June, compared with 57.1 billion rand six months earlier.”

In May this year, Bloomberg reported that MTN was looking to raise $1.1 Billion in debt in Nigeria in 2018. Nigeria is the MTN Group’s biggest market of all its 21 in Africa and Middle East.

So far, they have managed to close $552 Million from a consortium of 12 Nigerian banks. Which is half the amount the group is seeking.

According to CrunchBase, Jumia has raised at least $760 Million in funding. They first raised a €40 Milllion series A in 2012 from Rocket Internet, Milicom and Blackeney Management.

Series B of €130 Million was raised in 2013 from Millicom, MTN and Rocket Internet. This was followed by a $150 Million Series C at a pre-money valuation of $405 Million from Summit Partners, Rocket Internet, Orange, Millicom Systems, MTN, Goldman Sachs, CDC Group and AXA Group.

The company followed this up with $326 million in funding in 2016 from Goldman Sachs, MTN, Rocket Internet and a couple of other existing investors.