By Modupe Gbadeyanka
Africa’s e-commerce giant, Jumia, has filed an application for its proposed Initial Public Offering (IPO) on the New York Stock Exchange (NYSE) this year.
Jumia was founded some years ago by French entrepreneurs Sacha Poignonnec and Jeremy Hodara, who hold just over 2 percent each of the company’s shares.
Its biggest shareholder, by Rocket Internet, recently said it was divesting its remaining 28 percent stake in the company.
Reports say the pan-African conglomerate has submitted its application to the U.S. Securities and Exchange Commission (SEC) and if approved, will make the firm the first African e-commerce and tech company to trade its equities on the NYSE.
Jumia currently operates in 14 African countries including Nigeria, Kenya, Morocco and Egypt.
Its IPO will be latest in a string of public listings by Rocket Internet-backed companies as furniture retailer Home24 and food startups Hello Fresh and Delivery Hero have all been listed on the Frankfurt Stock Exchange in the last two years.
The company, which will trade as JMIA on the NYSE, hopes to improve its books when finally listed.
Jumia is reportedly valued at more than $1 billion and had four million active customers as at December 2018.
However, as of December 31, 2018, the the company has accumulated losses of nearly $1 billion, with losses widened to $195.2 million on revenue of just $149.6 million. The company is also burning through cash with negative operating cash flows of $159.2 million.
The continued losses are only one of the numerous risk factors the company lists, including political instability and regulatory uncertainty in African markets. The company also claims competition and “more aggressive pricing policies” from rivals including South Africa’s Takealot and Egypt’s Souq.com could negatively impact its business, QZ reports.
As part of its “Risk Factors” for potential investors it cites the continued losses as a lack of guarantee that it will “achieve or sustain profitability” or “pay any cash dividends” in the foreseeable future. While being transparent about potential risks is standard with S1 filings for initial public offerings, Jumia’s will give some investors pause.
