What it will cost to buy a share in Jumia for its $1.3 billion valuation
Jumia, the pan-African conglomerate of e-commerce businesses, has set a price range of $13 to $16 per share ahead of an initial public offering (IPO) on the New York Stock Exchange (NYSE).
The online retailer will offer 13.5 million American depository shares for purchase, according to an updated version of its IPO filing with US regulators, and could raise as much as $216 million, depending on investors’ appetite. If traded at the mid-point of that price range, for instance, Jumia’s valuation will be pegged around $1.1 billion.
Typically, once a share price range is set, a company looking to get listed then does a roadshow to gauge investor interest. The company’s shares are then priced amid that process with trading expected to begin soon afterwards. In the meantime, Jumia did not respond to Quartz Africa’s emails asking for an established trading timeline.
Jumia, which will trade as “JMIA” on the NYSE, has also received a cash injection ahead of its public offering: in a private stock sale, the company has confirmed a $56 million private placement from Mastercard Europe. It means Mastercard will be buying shares at whatever price investors agree ahead of the float and gives Jumia a confidence boost ahead of an uncertain listing for a young company which positions itself both as an “emerging growth company” and a “foreign private issues” as defined under US securities regulations.
As with most companies ahead of a prospective listing, Jumia’s S1 filing covered several risk factors for investors to consider while it talked up its ambitions in Africa’s e-commerce space, including touting its four million active customers across 14 African countries. But as Quartz Africa noted, the risk factors offer just a hint of how costly it is to crack e-commerce across Africa. As of the end of last year, Jumia had accumulated losses of nearly $1 billion and had negative operating cash flows of $159.2 million, for the 12 months to Dec 31, 2018. Its annual losses have also grown annually widening to $195.2 million on revenue of just $149.6 million last year.
But those losses will likely be a familiar—possibly even accepted—trend for investors especially ahead of what’s predicted to be big IPO year for tech startups with a history of making losses. Just last week, Lyft, the US ride-hailing company which lost over $900 million last year, launched its IPO amid solid investor interest. Uber, Lyft’s major competitor in the US, also known for being unprofitable, is also expected to get listed this year.
