Wakanow, Nigeria’s biggest online travel booking agency has raised $40 million from Carlyle Group, one of the world’s largest private equity firms. The news comes just months after it was revealed that Wakanow is in a financial crisis.
What a great way to close out the year! PE will continue to be a key driver for M&A and liquidity events Tech Startups in Africa. Carlyle basically provided liquidity to ACA. || Nasdaq-Listed The Carlyle Group Invests In Nigeria’s https://t.co/npQpsyDJw9 https://t.co/cB66tmBOGV— D.O (@docolumide) December 20, 2018
Founded in 2008, Wakanow is an online platform for flight booking. The company was created by former Nigerian-born NBA player, Obinna Ekezie. The platform allows users to book flights, send packages, book hotels among other things.
Since its launch, Wakanow has expanded quickly and now has a physical presence in five countries. By 2013, just five years after it launched, revenue from ticket sales grew to $55 million.
Buoyed by this, in 2014, the company got funding from African Capital Alliance, an African equity company with $400 million worth of capital. According to Nairametrics, this new funding was worth $20 million, and was spent on marketing and to scale the business.
The Carlyle Group, a global alternative asset manager, announced it has agreed to invest $40 MILLION in Wakanow— Olúwatósìn Olaseinde (@tosinolaseinde) December 20, 2018
These strides poised the company for a reported IPO planned for 2018. The company was looking to list, not in Nigeria, but on NASDAQ in the US.
However, despite its impressive growth and placement in the industry, Wakanow has been facing huge challenges in recent times. Since 2015, the company has struggled with low sales as Nigeria, its largest market, went into recession. The recession greatly affected aviation and luxury travel. And even worse, Wakanow had reportedly being issued flight tickets on credit during this period to drive sales.
By January 2018, the company was in deep distress. The situation was so bad, Zenith Bank, one of its lenders, was forced to appoint a Chief Financial Officer (CFO) to take over the company’s books. The CFO served as an insurance for the bank in order to recoup its loans.
Additionally, a global aviation industry association, International Air Transport Association (IATA), also began pressuring the company. As a member of the IATA, Wakanow had financial commitments to the association. But dwindling sales meant it would have to default.
Carlyle Group Provides Wakanow With a Lifeline
With the $40 million investment from Carlyle Group, it’s safe to say Wakanow now has a lifeline. The huge investment signifies a lot of commitment to the Nigerian company and gives it huge leverage over its current challenges and future growth.
Wakanow has experienced incredible growth since inception, disrupting the travel market and taking market share both online and offline,” says Idris Muhammad of Carlyle Group.
Wakanow is back as it is! Pretty bullish investment considering their current financial state. https://t.co/joFCTVqV0b— Eghosa Ewone (@Eghosakruz) December 20, 2018
He added, “we believe that this strong growth trajectory will continue as Wakanow benefits from an expanding middle class across the continent.”
Carlyle Group also believes that growing internet adoption in Nigeria and Africa is also poised to make Wakanow even more valuable for the industry going forward.
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