By Tonya Garcia, MarketWatch
Jumia Technologies AG, which calls itself the top online shopping site in Nigeria, has gone public to take advantage of expected growth in e-commerce across Africa.
Jumia /zigman2/quotes/210570938/composite JMIA +13.65% had been expecting to sell 13.5 million American Depository Shares (ADSs), representing 27 million ordinary shares, for $13-to-$16 per ADS. The shares priced at about the midpoint of that range, $14.50, and jumped more than 32% when trading began. The stock closed up more than 75% on its first day.
The company was founded in 2012 as Africa Internet Group and is headquartered in Berlin, Germany. Shareholders include the Berlin-based incubator and venture-capital firm Rocket Internet SE, which helped the company with its founding and owns a 20.6% stake. South African company Mobile Telephone Networks Holdings Ltd. owns a 29.7% stake. Other early investors include French insurer Axa /zigman2/quotes/202169431/delayed FR:CS -1.09% and French telecoms company Orange SA /zigman2/quotes/201008076/delayed FR:ORA -2.79%
In keeping with German regulations, Jumia has a dual-board system: a management board and a supervisory board. The management board, which is responsible for day-to-day operations, comprises Jeremy Hodara and Sacha Poingnonnec, co-founders of the company who have served as co-chief executives since 2012. Both were employed at McKinsey & Co. before launching Jumia.
Antoine Maillet-Mezeray, the company’s chief financial officer, joined in 2016 and is a veteran of tech companies.
The eight-member supervisory board, which is charged with keeping the management board in check, includes Gilles Bogaert, chief executive for EMEA and Latam for Pernod Ricard SA /zigman2/quotes/204974112/delayed FR:RI -0.50% and Andre Iguodala, an NBA player on the Golden State Warriors.
Jumia is trading on the New York Stock Exchange under the ticker “JMIA.” Morgan Stanley, Citigroup, Berenberg, RBC, Raymond James, Stifel and William Blair were underwriters on the deal . Proceeds will be used to increase financial flexibility, raise the company’s public profile and facilitate access to public equity markets.
Jumia sells items ranging from wall clocks to smartphones to clothing from brands like Zara and local designers like David Wej. Jumia also offers food delivery, travel booking, and other services.
The company is active across six African regions, which encompass 14 countries that accounted for 74% of African consumer spending, according to the prospectus. In 2018, online retail accounted for less than 1% of total sales for the countries where Jumia operates.
Among the factors that augur well for online growth in Africa: projected GDP growth for the continent, which is estimated at 6% for 2019; a growing middle class that is expected to reach 42% of the population by 2060; a growing urban population, with 59% of Africans expected to live in urban areas by 2050 (82% of the North American population lived in urban areas in 2018); and a growing number of people overall, with Nigeria expected to be the third-most populated country on Earth by 2050, after India and China.
As of Dec. 31, 2018, Jumia had 81,000 active sellers, defined as a retailer who received an order on the Jumia marketplace within the previous 12 months. There were four million active shoppers, who are customers who placed an order in that same time period, up from 2.7 million active shoppers the year earlier.
“We possess extensive local knowledge of the logistics and payment landscapes in the markets in which we operate, which we consider to be a key component of the success of our company,” the prospectus says.
“In addition, we take full advantage of the mobile-centric aspects of the African market by having adopted a ‘mobile-first’ approach in our product development and marketing efforts, which allows us to expand the audience for our goods and services, increase engagement and conversion and reduce our consumer acquisition costs.”
Gross merchandise volume in 2018 was 828.2 million euros, or about $938.0 million, up from €507.1 million the previous year. Revenue for the year was €130.6 million, or about $147.9 million, up from €94.0 million the year before.