According to sources familiar with the matter, the MTN Group is planning sell its R4.2 billion stake in Jumia Technologies. Often referred to as Africa’s Amazon, Jumia is predominantly an ecommerce platform operating in 14 countries, including Nigeria, Ivory Coast and South Africa.
MTN is looking to sell this stake in an effort to pay off some of its debt and enter new markets in its telecommunications capacity. Jumia’s shares have surged 142% this year alone, allowing MTN to get out with a nice profit. It has always considered Jumia as a non-core business unit, used as a value growth vehicle rather than business growth. No final decision has been made on the price of the sale, or to whom it would be awarded.
In 2019 the share price of Jumia dipped below its IPO price after improper transactions in its Nigeria business were uncovered. The company was founded by two Frenchman, Sacha Poignonnec and Jeremy Hodara, and is headquartered in Germany.
Bullish sentiment on Jumia stock is increasing due to tailwinds created by the coronavirus pandemic. June saw the company announce that its online food ordering platform had seen sales climb at a 30% month-over-month rate since March, and its retail business and payment processing services could continue to enjoy heightened engagement amid shifting consumer behavior driven by COVID-19. Africa’s e-commerce market is still relatively small, but it has a huge room for expansion in the coming decades, and this year’s unprecedented conditions appear to be accelerating the industry’s growth in the continent.
This latest sale comes as part of MTN disconcerted effort of disposing of non-core assets. It is a fundamental part of its strategy to reduce debt and drive future growth.
A spokeswoman for MTN declined to comment because the company is in a closed period ahead of financial results on Thursday. A representative for Jumia declined to comment.