Jumia Technologies AG, the leading e-commerce platform in Africa, announced plans on Tuesday to raise EUR 244 million ($268 million) through a rights issue as part of its strategy to strengthen its financial position and fuel expansion efforts across the continent.
The move comes as Jumia seeks to solidify its market presence and invest in key areas such as technology, logistics, and customer acquisition.
The company’s current share capital is registered at EUR 244,925,650.00, divided into 244,925,650 ordinary bearer shares with no par value.
Mechanics of the Rights Issue
The proposed rights issue will offer existing shareholders the opportunity to purchase additional shares at a discounted price, ensuring they can maintain their proportional ownership.
The initiative requires shareholder approval and is structured under German corporate law provisions, allowing the management board, with the supervisory board’s consent, to increase share capital within a five-year period.
In June, Jumia’s shareholders authorized the management board to increase share capital by up to EUR 98,945,871.00 until June 2029.
Following a partial utilization of this authorization, Jumia can still issue an additional EUR 58,490,399.00 in new shares.
Strategic Deployment of Funds
Jumia plans to deploy the funds raised from the rights issue into several strategic initiatives:
- Investing in the platform’s technological infrastructure to enhance user experience and operational efficiency.
- Strengthening the logistics network to ensure faster and more reliable delivery services.
- Scaling up marketing efforts to attract new customers and retain existing ones.
- Fortifying the company’s balance sheet to support financial stability and flexibility.
Other details of the offer
Existing shareholders will have the option to subscribe to new shares in proportion to their current holdings, allowing them to maintain their ownership stake. The rights issue price will be set at a discount to the market price, presenting an attractive investment opportunity.
Jumia’s management and supervisory boards will oversee the rights issue’s execution to ensure transparency and regulatory compliance.
The company has committed to providing regular updates to shareholders on the progress and impact of the capital increase.
Jumia’s latest financials
Jumia also on Tuesday released its financial statement for Q2 2024, showing that was able to cut down its operating loss by 8% in the quarter.
The company posted a $20.2 million operating loss in Q2 2024 compared with the $22.1 million it recorded in the same period last year.
Jumia’s revenue for the second quarter stood at $36.5 million down from $44 million recorded in the same period last year.
The e-commerce platform’s CEO, Francis Dufay, believes that the company’s strategy to cut its losses and move to profitability is working as envisaged.
According to him, Jumia’s deep understanding of the African e-commerce market as well as its unique asset base and strategy position the company for growth as it progresses on the path towards profitability.