Jumia surges on US debut after listing

CEO of Sodexo Kenya Neil Ribeiro with an official from Jumia Food moments after signing the digital meal voucher partnership. [James Wanzala]

Jumia Technologies AG shares soared by 75 per cent 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 Sh2550 ($25.46 ) as of 4:34pm on Friday, valuing the company at more than Sh190 billion ($1.9 billion). Jumia earlier raised Sh19.6 billion ($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 4 million customers in 14 African countries.

While the retail platform isn’t profitable, sales jumped by almost 40 per cent last year to 130.6 million euros (Sh14.7 billion or $147.3 million).

“This is about awareness,” Poignonnec said in a phone interview. “Millions and millions of Africans are yet to realize the benefits of e-commerce.”

The company has headquarters in Berlin and got early funding from German startup incubator Rocket Internet SE, while its biggest shareholder is MTN Group Ltd, Africa’s largest mobile-phone company.

Distribution infrastructure

More recent investors include French drinks maker Pernod Ricard SA and Mastercard Inc, which put in a combined 125 million euros 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 payments if they don’t have access to banking services.

“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 favorable long-term trends underpin the rise of the African online consumer.”

The offering was led by Morgan Stanley, Royal Bank of Canada, Citigroup Inc and Berenberg Capital Markets LLC Citadel Securities was the designated market maker.

Poignonnec and Hodora met while colleagues at McKinsey & Company, 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.”

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