MTN Group has sold its 18.9% stake in Jumia, ‘Africa’s Amazon’ for $142.31 million after its August filing with the New York Stock Exchange as it moves to simplify its portfolio over the next five years.
“As part of its asset realisation programme, MTN Group completed its exit from its 18.9% investment in e-commerce venture Jumia,” MTN announced in a statement, and added, “We are proud to have been a partner in the evolution of one of Africa’s pioneering online marketplace businesses and will continue our relationship with Jumia through ongoing operational partnerships in some markets.”
MTN Group is not the first to exit Jumia.
In April, Rocket Internet, the German tech investor and inventor of Jumia exited its own baby Jumia after it sold its 11% stake at the end of last year. Jumia went public in April 2019 on the New York Stock Exchange Jumia a share price of $14.5, raising the firm $196 million for its retail, food delivery, real estate, logistics, hotel, and flight bookings verticals.
It was Africa’s first tech firm to go public in New York and had a market value of nearly $2 billion but it has failed to impress.
However, the flopped listing was a great exit for both MTN, Rocket Internet among others. Founded in 2012, Jumia has been bleeding money. Its revenues stood at 130.6 million euros in 2018 compared to 94 million euros in 2017 but the firm’s losses rose from 165.4 million euros in 2017 to 170.4 million euros in 2018. The firm had accumulated losses of 862 million euros by the end of last year. The IPO was the only sensible way out for MTN and Rocket Internet and other shareholders.
Jumia is an expensive venture and an IPO was the only best way for the firms to exit quickly and safely. This does not mean that Jumia is not growing or reaching more customers but the investors had to have their returns.