SEEK, the leading provider of online employment services in Australia and New Zealand is not giving up on Africa yet, even though its portfolio companies continue raking in losses in millions of dollars and are on no clear path to profitability or market dominance apart from a few key markets like Kenya and Nigeria.
For the year ended 30 June 2016, One Africa Media had revenues of $12m but it’ operating costs stood at $21.5m. Though this was an improvement from $10.1 revenues in June 2015 and $22.3m in operating costs in June 2015, SEEK still has much to do to turn the venture around. OAM owns 100% of sites such as Jobberman, BrighterMonday and Cheki with a minority shareholding in BuyRentKenya.
On 14 June 2016, SEEK invested a further US$2.0m (AUD $2.7m) in OAM, resulting in an increased ownership of 34.6%
SEEK now owns 34.6% of One Africa Media.
On 15 April 2015, SEEK entered into a share subscription agreement to make an additional US$10.0m investment in OAM (in two tranches of US$5.0m each). Tranche 1 of $US$5.0m (A$6.4m) was settled in April 2015 taking SEEK’s ownership of OAM to 27.5%. Tranche 2 of US$5.0m (A$6.9m) was settled in October 2015 taking SEEK’s ownership of OAM to 30.6%.
SEEK began this friendship with One Africa Media in 2013 when it made an investment of $20 million for 25 percent via its cash reserves to fuel OAM’s expansion in Nigeria, South Africa and Kenya mostly through re-investing to capture the large market opportunities across Africa.
At the time, Jason Lenga, Managing Director of SEEK International said “Africa presents a strategic opportunity to benefit from the significant long-term growth opportunities for online classifieds businesses. Internet and mobile penetration are growing rapidly and key economies within the region are experiencing substantial increases in GDP.”
Though the early stage investment was to help position One Africa Media to expand its economic and structural growth in the region, things have not moved as fast as SEEK wanted but the increase in shareholding into OAM is a clear sign that OAM is a healthy business and like other businesses in Africa and other emerging markets-it has its own fair share of challenges things like Internet penetration and adoption among others.
With Ringier Africa into play, OAM will still expand across Africa as well as grow its companies in majority of this markets. The entry of players like Rocket Internet and Frontier Digital Ventures is a sure sign that Africa is the next big market for those who dare.