Jumia expects $1.5 billion in New York listing – could help MTN reduce debt

Africa’s largest online retailer Jumia is planning an initial public offering (IPO) in New York this year that could value the business at about US$1.5 billion, according to people familiar with the matter.

Jumia’s largest shareholder MTN Group Ltd. is planning to raise as much as US$600 million from selling its shares through the IPO, said one of the people, who asked not to be identified as the information is not public.

MTN and Jumia declined to comment. MTN had been weighing a listing or private sale of its shares in Jumia, people familiar with the matter said last August.

A U.S. IPO would catapult Lagos, Nigeria-based Jumia into the global spotlight after 7 years of rapid growth across Africa, where it provides an Amazon.com Inc.-like service and has platforms in 13 countries. Jumia is a rare so-called unicorn in Africa – a private company valued at more than US$1 billion – being 1 of only 3, according to research firm CB Insights.

Internet access

Jumia will tell potential investors that two-thirds of Africa’s 1.2 billion people still do not have access to the internet, providing plenty of potential for sales growth and profitability, said 1 of the people. Internet giants such as Alphabet Inc.’s Google and Facebook Inc. are among those striving to extend connectivity to the more remote and poorer parts of the continent.

MTN could be selling Jumia in New York at about the same time as an IPO of its Nigeria unit in Lagos, a move the carrier agreed to as part of a US$1 billion regulatory fine in 2016. The latter will be done in 2 stages, with an introductory listing in the first half of this year followed by a sell down of its majority stake, Chief Executive Rob Shuter said on a recent call with investors.

A successful listing of both Jumia and the Nigeria unit could help MTN reduce debt, which increased to R69.8 billion (US$5.06 billion) in June from R57.1 billion (US$4.14 billion) at the end of 2017. The rising liabilities and a dispute over non-payment of back taxes in Nigeria is weighing on the company’s share price, which has fallen by almost a third in the last 12 months.

The stock traded 0.8 percent lower at R85 (US$6.2) by the close in Johannesburg on Friday, valuing the company at R160 billion (US$11.6 billion).

Other Jumia shareholders include Goldman Sachs Group Inc., Millicom International Cellular SA, Orange SA and Africa Internet Group, a venture backed by Goldman, MTN and Rocket Internet SE.

Source: Bloomberg News