Ten days after announcing its intention to sell 20 million ordinary shares in a secondary transaction, Jumia Technologies AG (NYSE: JMIA) has successfully completed the sale, achieving its funding goal. According to a securities filing obtained by TechCabal, the e-commerce company raised gross proceeds of $99.6 million from the sale, with an average share price of approximately $4.95. This price is slightly above the $4.90 per share at which Jumia’s stock closed on the previous Friday.
One notable investor in this round was Pernod Ricard, a global leader in the wine and spirits industry, which purchased 1.27 million shares for around $6 million. This strategic investment reflects confidence in Jumia’s potential in Africa’s growing e-commerce market.
Jumia’s financial health has been under scrutiny, with at least one Wall Street analyst projecting a $65 million loss for the company in 2024. As of the second quarter of 2024, Jumia’s cash position was reported at $92.8 million. The additional $99 million raised through this share sale will significantly bolster the company’s cash reserves, providing much-needed financial flexibility.
The funds are earmarked for several key initiatives, including customer acquisition, expansion of Jumia’s supplier base, and the enhancement of its logistics network. Additionally, Jumia plans to invest in upgrading the technology that supports its vendors and its marketing vertical, which has been a growing focus since 2021.
Despite missing its revenue targets in the second quarter of 2024, investor sentiment remains optimistic regarding Jumia’s ability to navigate the complex African e-commerce landscape. The company’s management will need to leverage this fresh capital effectively to sustain growth and work towards profitability.
This strategic move positions Jumia to better compete in Africa’s challenging but promising e-commerce market, where it faces competition from both local and international players. The coming quarters will be crucial as the company seeks to deliver on its growth strategy and reassure investors of its long-term potential.