Investing in a little known African e-commerce startup called Jumia back in 2012 is set to seriously pay off for MTN this year. Jumia is a rare so-called unicorn in Africa — a private company valued at more than $1 billion — being one of only three, according to research firm CB Insights.
Jumia – which is regarded as Africa’s version of e-commerce giant Amazon – launched in 2012 Nigeria and over the years expanded to 13 countries including the likes of Egypt, Morocco, Ivory Coast, Kenya and South Africa.
And with MTN having a 40% stake in the business, an IPO in the US that could value Jumia at $1.5bn would make it a very good investment for MTN.
Interestingly, the IPO comes concurrently to pressures that MTN is facing in Nigeria with regard to paying regulatory fines.
Jumia is planning an initial public offering in New York this year that could value the business at about $1.5 billion, according to people familiar with the matter.
Jumia’s largest shareholder MTN Group Ltd. is planning to raise as much as $600 million from selling its shares through the IPO, said one of the people, who asked not to be identified as the information isn’t public.
MTN and Jumia haven’t commented on the matter yet. MTN had been weighing a listing or private sale of its shares in Jumia, people familiar with the matter said last August.
The company was set up by French entrepreneurs Sacha Poignonnec and Jeremy Hodara in 2012 to take advantage of rising internet use in the world’s least connected continent, as well as a lack of availability of items such as designer watches and sunglasses in Lagos stores.
Internet Access
Jumia will tell potential investors that two-thirds of Africa’s 1.2 billion people still don’t have access to the internet, providing plenty of potential for sales growth and profitability, said one of the people.
Internet giants such as Alphabet Inc.’s Google and Facebook Inc. are among those striving to extend connectivity to the more remote and poorer parts of the continent.
MTN could be selling Jumia in New York at about the same time as an IPO of its Nigeria unit in Lagos, a move the carrier agreed to as part of a $1 billion regulatory fine in 2016.
The latter will be done in two stages, with an introductory listing in the first half of this year followed by a sell down of its majority stake, Chief Executive Rob Shuter said on a recent call with investors.
A successful listing of both Jumia and the Nigeria unit could help MTN reduce debt, which increased to 69.8 billion rand in June from 57.1 billion rand at the end of 2017.
The rising liabilities and a dispute over non-payment of back taxes in Nigeria is weighing on the company’s share price, which has fallen by almost a third in the last 12 months.
The stock traded 0.8 percent lower at 85 rand by the close in Johannesburg on Friday, valuing the company at 160 billion rand ($11.8 billion).
Other Jumia shareholders include Goldman Sachs Group Inc., Millicom International Cellular SA, Orange SA and Africa Internet Group, a venture-backed by Goldman, MTN and Rocket Internet SE.
