After surging a few weeks ago, the value of Jumia’s shares took a serious hit on November 30. Blame it on the announcement of an “at-the-market offering” which implies that current shareholders will see their shares diluted. The e-commerce company turned to Citigroup, an investment banker, to complete its operation.
An ATM offering allows listed companies to raise capital over time. This is done by gradually selling newly issued shares in the secondary market at prevailing market prices, through a designated broker. The Jumia transaction involves 8 million shares. Sold at 33 dollars (the value of the title to date), they will allow the company to raise 260 million dollars. The dilution involved by this will be about 10%.
Read also: Kenya’s SportPesa Which Once Earned $1bn Reportedly Sells Its Brand For $134K
Jumia intends to use this money for its general development. Africa’s main e-commerce player has made a fairly usual choice given its situation. It will expand its activities to more African countries and invest in improving its capacities in several areas.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer