African e-commerce company Jumia is seeking to raise approximately $100 million (KES 12.98 billion) through a new share offering. Jumia approximates it will achieve this by selling 20 million American depository shares over the coming weeks at the current share price of around $5.70. However, the company faces uncertainty regarding the final amount raised, as the share price has plummeted from its recent high of $11 to $4.90.
For Francis Dufay, this will be his first secondary share sale as CEO of the online store. As for Jumia, this will be the second time the company takes this approach. The company secured nearly $600 million in funding through secondary share sales between 2020 and 2021. Having achieved substantial cost reductions and operational improvements, the company is now raising funds to accelerate expansion.
“The new funding will be used to expand our supply chain network, particularly by enhancing logistics to reach smaller cities and broadening our overall network,” the CEO said. “We believe the time is right to shift the cursor towards growing and invest some extra money so we can scale the company faster and break even faster.” Dufay added.
The company plans to use the new funds to increase its cash balance, currently standing at $92.8 million, while also allocating resources to expand its customer base, product offerings, supplier network, and marketplace presence.
Jumia Reduces Losses
Jumia, whose stock price has surged, resulting in a valuation exceeding $1.3 billion in recent weeks, managed to reduce its quarterly loss to $19 million from $38 million in the previous year. However, the recently released Q2 results were somewhat of a mixed bag.
Both revenue and gross merchandise value (GMV) experienced declines in Q2 compared to the previous year. Revenue slipped 17% to $36.5 million, while GMV dropped 5% from $181 million to $170.1 million. Currency depreciation in key markets was a major factor but Jumia stays positive.
“Based on the positive impact of its growth strategy, Jumia projects an increase in both orders and GMV in 2024, excluding the potential impact of foreign exchange,” the company said.
