Germany's Rocket Internet announced on Thursday, 2 April 2020 that it had sold all the shares it held in Jumia Group - an e-commerce company focussed on African consumers. Despite being the company that incubated and started the various startups that were eventually amalgamated under the Jumia Group banner, Rocket Internet-only held 11% of shares in the e-commerce company after several rounds of fundraising and eventually listing on the New York Stock Exchange (NYSE).

Bettina Curtze, Rocket Internet's Head of Finance and Investments, did not reveal how much the shares were sold for or to who, except to say that they were sold between 8 November 2019 and the period at which the coronavirus disease 2019 (COVID-19) pandemic was declared. On 31 March 2020, the German technology holdings company reported that it had an available net cash position of €2,1 billion, a number which Curtze said included the proceeds from the sale of their Jumia stake.

"2019 has been a successful year for Rocket Internet and many of its companies. The Corona pandemic has introduced a high degree of uncertainty to the development of the global economy this year and will also negatively impact our network of companies in the coming months and quarters," commented Oliver Samwer, founder and CEO of Rocket Internet, on the company's financial year-end results.

Jumia Technologies AG (JMIA) all-time stock price chart. Source: Yahoo! Finance

Jumia declared a fraud

Since listing on the NYSE during April 2019, the company has faced criticism from many people. One of the initial arguments and criticisms against Jumia was that it should not bill itself as "Africa's first unicorn" as it is not an African startup, whether by shareholding or where it is headquartered.

The other criticism which had a severe impact on the e-commerce company's share price has been that it is engaged in misrepresenting its financial data to boost its share price.

This emerged when Andrew Left, founder of Citron Research, released a report stating that they have a "smoking gun" which proves that JUMIA is a fraud and that the stock is worthless. After the release of that report, JUMIA shares tumbled down to the current levels of around $2,82 a share (on 3 April 2020) from their high of $40,21.

The future for Jumia and e-commerce in Africa

Rocket Internet could have been negotiating with various parties to sell its stake in Jumia after the NYSE share sale lockout period expired as part of the conditions for its IPO. However, the timing of the sale announcement (although it formed part of Rocket Internet's financial year-end results presentation) is quite curious given the state the world is currently which one would argue favors e-commerce companies.

Also, although for a long time Jumia has been commonly known to be a Rocket Internet company despite the shareholding structure, with MTN Group as the single largest shareholder in Jumia it effectively means the e-commerce company is an MTN company.

But this could also change as when speaking to iAfrikan MTN had previously indicated that it is also possibly looking to sell its stake in Jumia.

"Originally the investment was a way for MTN to invest in and assist in the growth of the digital ecosystem across the continent. Now that has developed, MTN is more focussed on its ongoing commercial relationship with JUMIA rather than maintaining an equity stake," explained an MTN spokesperson at the time.

This sentiment by MTN was further repeated in January 2020 when the company said that it still does not see Jumia as a long-term strategic asset for the Group.

With several e-commerce companies across the continent have found it difficult to become profitable or even gain traction, the sale by Rocket Internet and possible sale by MTN Group could be interpreted as a vote of no confidence in the continent's e-commerce industry currently.

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