Rocket Internet, Jumia’s former financier, is planning to delist its shares from the Frankfurt and Luxembourg stock exchanges. This is happening almost 6 years after the company went public in 2014.
At the time of its IPO, it was valued at €5 billion, and raised more than €1.4 billion. However, Rocket’s tale of woe began the day it started trading. Its shares, which were priced at €42.50 dropped by almost 13% to about €36.97.
The share price bounced back to about €56, which is higher than the initial price, later in 2014. However, it dipped again in 2015, losing about $46 million and dropped in valuation by almost 30%. It has been on a downward spiral since, almost without a chance of rebounding to its €42.50 price.
Delisting the company’s shares from the stock market will allow Rocket Internet to focus more on tech investments outside of the capital market.
It said in a statement, “The use of public capital markets as a financing source as essential [sic] parameter for maintaining a stock exchange listing is no longer required and adequate access to capital is secured outside the stock exchange.”
“Outside a capital markets environment, the Company will be able to focus on a long-term development irrespective of temporary circumstances capital markets tend to put emphasis on.”
The company’s goal of making growth capital available to startups by listing has seen a decline largely because the tech ecosystem has seen an influx of angel investors, VC firms, and other capital sources after it made its debut.
Therefore, staying listed to provide capital is no longer necessary, and according to the company, it is “better positioned as a company not listed on a stock exchange.”
Rocket is also delisting to reduce operational complexity and allow it to set up new companies relatively easily by freeing up administrative and management capacity and reducing costs.
Rocket’s portfolio companies include Jumia, Zalando, HelloFresh, InstaFreight, FoodPanda, PayFlow and Zalora Group. Altogether, the company has invested in about 200 companies with a few making big exits.
Jumia, an Africa-focused e-commerce group saw its share price surge in July and August. The company’s second-quarter earnings report shows some improvement as it recorded a 44% reduction in loss and a record gross profit of €6 million (₦2.6 billion).
Even with the improvements, its share price, which had risen by 183% to about $21 in July dropped back to $13.50 at the close of market on 12 August. It currently trades at $9.48.
Rocket Internet sold its 11% stake in Jumia in April.
The shareholder meeting to formally discuss the delisting of Rocket Internet’s shares is scheduled to hold virtually on September 24. The company is planning to buy back 8.84% of its own shares through a separate buyback program.
CEO, Oliver Samwer will retain his 4.53% stake in the company while Rocket’s investment division, Global Founders Capital, will retain its 45.11% stake in the business.
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