Venture Capital company, Rocket Internet SE has announced the selling of its stake in leading African e-commerce company, Jumia at the end of Quarter 1 (Q1). The announcement which was made on Thursday, 2nd of April 2020, coincided with trending news of the closure of Jumia’s warehouse in Lagos by the state government for non-compliance to its lockdown measures. The warehouses were however reopened the in less than 24 hours.
According to Bettina Curtze, head of finance and investments of Rocket Internet SE, the company which had held 11 percent stake in Jumia as of November 8, sold its holding between then and the onset of the coronavirus crisis.
Although the proceeds the VC made from the e-commerce company was not disclosed, the investor is included in the 2.1 billion euros ($2.30 billion) of net cash the company had as of March 31, 2020, marking the close of Q1.
The Berlin-based investor is reputed for withdrawing investments from startups when they become grounded enough to stand on their own. The VC incubates and invests in internet and technology companies globally providing deep operational support to entrepreneurs and helping them build market-leading companies. Jumia’s listing on the New York Stock Exchange (NYSE) was an indicator of the company’s exit from the e-commerce firm.
According to a news report, the CEO Oliver Samwer said the method his company employ is needed as the company plans to “hold on to its mountain of cash” to allow it access to opportunities and compete with rivals from US and China.
Last year April, Jumia listed as the first African startup on the NYSE. The company debuted the stock exchange trading at $14.50 per share a significant IPO that gained much favour with global media for an African startup. At the time Rocket Internet SE was also looking to list the Jumia on either the London or the Frankfurt Stock Exchange. It aimed to raise $245.7 million from the Jumia listing.
However, Jumia has seen its shares steadily fall on Wall Street not long after Citron Research, an online investment newsletter run by Andrew Left, questioned some of its sales figures. Left publishes reports on firms that he believes are overvalued or are engaged in fraud. Since the beginning of 2020, the e-commerce company has steadily closed offices in some African countries to curb losses and focus on major markets.