MTN has offloaded 10.8 per cent of its 29.7 per cent shareholding in Jumia Technologies AG, the pan-African e-commerce company currently being rocked by a fraud allegation at the New York Stock Exchange (NYSE).
MTN which released its first quarter 2019 financial result last week said, the disposal of 10.8 per cent stake in Jumia has resulted in the dilution of its shareholding to 18.9 per cent during the IPO at NYSE recently.
“This investment is now valued at approximately $560 million as at 6 May 2019. As of 12 April 2019, we will no longer operate equity account for the Jumia investment”, MTN said in its financial statement.
Sources say MTN still plans to dispose of its remaining 18.9 per cent equity in Jumia before the end of 2019 although it needs to wait after a six months investor lock-in period that followed Jumia’s successful share sale in New York.
If that is successful, MTN will be able to pay up its debt which increased to $4.39 billion from $3.94 billion in 2018. Apart from MTN, other investors such as Rocket Internet with 28 percent stake in Jumia could also take advantage of the listing to exit the loss-making business.
Meanwhile, following the May 9, 2019, Citron Research report questioning data contained in Jumia’s April 2019 IPO materials versus data contained in an October 2018 confidential presentation, a number of firms have alerted investors about investigations into Jumia’s possible disclosure violation cs.
The Citron report had accused Jumia of (1) overstating certain financial metrics in the prospectus, and (2) omitting adverse information about the number of returned, undelivered, or cancelled orders from the prospectus. In response, the price of Jumia ADSs significantly fell on May 9, 2019.
The consequences of Citron’s report are best seen in the stock’s price recent decline – since May 1st, when it reached its highest price ($46.99), to Thursday when Jumia’s stock lost 42.78 per cent, having a closing price of $26.89. Also, on Friday, May 10, Jumia stock dropped further to $24.9 per cent.
However, Citibank subsidiary, Citi Research has debunked the Citron report authored by Andrew Left, saying it did not provide enough evidence to show that Jumia stock was a fraud aimed at duping investors. Meanwhile Jumia said “it will release its Q1 2019 results on Monday, May 13, 2019, alongside its official statement in response to Citron. The results too will clarify on some of the issues raised by Citron.”
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