MTN Group has announced the sale of its stake in Jumia, one of Africa’s largest eCommerce firms, making slightly over US$142 million for the sale.
MTN says it’s making a net proceed of US$142.31 million in a sale, which forms part of its ongoing efforts to streamline its portfolio and minimize debt by disposing of its non-core businesses.
It would be recalled that in August 2020, a week before Jumia’s Q2 2020 earnings call, MTN announced that it was planning to sell off its 18.9% stake in Jumia and telecom tower company, IHS Towers.
Then, MTN said that it had not finalized the decision. But it now reveals that it made a filing with the New York Stock Exchange to prepare for a secondary sale of its shares.
“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 said in a statement.
In April 2019, Jumia became the first African tech company to list on the New York Stock Exchange, and its shares soared to hit a $2 billion valuation. Yet, its failure to make a profit, a short-selling article from Citron, and issues with partners all sent its stock crashing down.
Six months later, Jumia had lost its unicorn status and its shares sold for as low as $3 at the start of the pandemic.
In March 2020, Rocket Internet sold off its entire stake in Jumia but did not fully reveal the financial details in that deal. Interestingly, Jumia’s stock rose 142% in the months following the pandemic and it briefly regained its unicorn status.
But MTN’s announcement in August caused fresh uncertainty for investors. When Jumia finally released its financial results, its shares fell once more to single-digit numbers.
Andrew Left, writer of the short-selling article that initially sent Jumia’s shares tumbling down, seemingly had a change of heart. His article earlier in October 2020 began to attract investors once more.
In the last 7 days, Jumia’s shares have steadied between $16 – $19 and its market cap has reached as high as $1.5 billion.
A negative pre-market movement has followed MTN’s announcement, but it has remained within the price range of the last seven days –$17.25 and it’s currently valued at $1.35 billion.