Jumia Group Explores IPO Option as Rocket Internet Plots Exit

The Nigerian eCommerce world was in shock when Konga was sold to Zinox. With recent events, it looks like we are in for another surprise. Apparently, according to Reuters, Jumia Group is on the verge of an IPO. It’s long time investor, Rocket Internet, is considering an IPO as it seeks to pull out of the eCommerce company. Rocket Internet has been an investor in Jumia since it was founded in 2012.

Rocket Internet, the German Incubator behind Jumia, is considering an IPO for the e-commerce company.

“A listing of shares, in a volume of under 200 million euros ($245.7 million), could take place in late 2018 or in 2019, either in Frankfurt or in London,” Reuters wrote. pic.twitter.com/Rr0i4aErSc

— Digest Africa (@DigestAfrica) March 17, 2018

The German investment bank, Berenberg, which has worked closely with Rocket Internet on capital market transactions, may lead the process. The listing could be held in Frankfurt or London in late 2018 or early 2019 with the proposed listing volume probably under €200 million ($245.7 million).

Rocket Internet explores IPO of online shopping group Jumia: sources: FRANKFURT (Reuters) – German start-up investor Rocket Internet is exploring a stock market listing of loss-making African online shopping platform Jumia, people close to the matter said. https://t.co/bq6aNKRZIq pic.twitter.com/Txdwgal4ON

— Vantagepoint (@getvantagepoint) March 17, 2018

However, information on the valuation of Jumia was not provided, and Rocket Internet declined to make any comments.

Is Rocket Internet Pulling Out of Nigeria?

Not quite. Rocket Internet is known for pulling out of start-ups once they become solid. Last year, Rocket Internet listed three of its portfolio companies (Delivery Hero, HelloFresh and Home24) on the stock market. HelloFresh, a meal-kit startup was looking to raise between €243 ($300.12)  million and €311 million ($384.1), at a valuation of $1.7 billion. While DeliveryHero listed at a valuation of €994million.

CEO of Rocket Internet, Oliver Samwer, explained that it needs to “hold on to its mountain of cash” to allow it access to opportunities and compete with rivals from US and China.

And according to a 9M 2017 investor presentation by Rocket, Jumia had significant Gross Merchandise Value (GMV) growth of 69.7% in Q3 2017 to €91.8m from €54.1m in Q3 2016.  Though these signals are rather surprisingly, growth potentials may still exist.

Trouble at Jumia

Jumia seems to be having a bad time. For one, profitability is still a big issue for the eCommerce company. Last year, it recorded a net loss of $61 million between January and June. Additionally, the sale of rival Konga, for a reportedly cheap amount, validates the fear that Jumia may not also be as strong as expected.

Nevertheless, it’s not all bad news. Jumia Group has raised over $700 million from investors, giving it a valuation of $1 billion. Hopefully, the IPO offering would go a long way in making the eCommerce company solid again.