Chinese mobile-phone maker and brand owner of Tecno, Transsion, has listed in an IPO on Shanghai’s STAR Market.
According to Transsion’s spokesperson as confirmed by Techcrunch, the Shenzhen-based company and African top mobile phone seller could raise nearly $400 million by listing.
Transsion has issued a stock market filing 80 million A-shares at an opening price of 35.15 yuan ($4.93) each, raising 2.81 billion yuan ($395 million).
Transsion’s listing and consequent share sale have raised its valuation to $395 million. The A-shares Transsion sold are the common shares issued by mainland Chinese companies and are normally available for purchase only by mainland citizens.
STAR is the Shanghai Stock Exchange’s new Nasdaq-style board for tech stocks that went live in July with some 25 companies going public. Transsion joining STAR with its current valuation establishes the company as one of the biggest attractions on the market.
In March 2018, Transsion planned a huge backdoor Stock Market Listing in Shenzen Stock Market before finally announcing its intent to go public and filed its first docs with the Shanghai Stock Exchange in April.
Why list in China?
Despite being based in China, Transsion holds a huge part of the smartphone market in Africa. However, it opted to list in China instead of Africa. Why?
The African stock markets do not appear to possess the sort of liquidity Transsion may need. For instance, Nigeria’s NSE has a market cap of less than $30 bn. South Africa, while better with $1 tr JSE, is considerably smaller than the Shanghai Stock Exchange with its US$5.01 trillion market cap.
The Shanghai Stock Exchange appeals more to a company with international ambitions.
Transsion in Africa
In Africa, Transsion holds 54% of the feature phone market through its brands Tecno, Infinix and Itel. In smartphone sales, it is second to Samsung, according to International Data Corporation stats. In fact, according to data from 2017, Transsion shipped at least 12 million smartphones to Africa.
GSMA stats peg the smartphone adoption rate at 34% but this is expected to grow to 67% by 2025.
With relatively impressive devices at affordable prices, Transsion’s Tecno, Infinix and Itel brands can continue solidifying their positions in Africa as smartphone penetration increases.
Transsion maintains a manufacturing facility in Ethiopia to support its Africa’s sales network. With the funds raised from the STAR Market, Transsion plans to spend $227 million on building more phone assembly hubs.
Transsion also has R&D centres in Nigeria and Kenya and its sales network in Africa includes retail shops in Nigeria, Kenya, Tanzania, Ethiopia and Egypt.
The company has also started to support the venture funding of African startups. In August, the Transsion funded Future Hub teamed up with Kenya’s Wapi Capital to source and fund early-stage African fintech startups.
With the Chinese-owned Opera already venturing into Nigeria, this potential move by Transsion could mean greater Chinese influence and investment in the African tech and digital market.
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