Jumia is looking to raise funds from investors by selling 9 million American depositary shares (ADS) and 18 million ordinary shares. This is as per the company filing made on March 18, 2021.
ADSs are American Depositary Shares which refer to shares in foreign companies that are held by U.S. depositary banks. These can be traded in the U.S., including on major exchanges. ADSs represent ownership interests in securities that are on deposit with the depositary. Plus, they allow foreign companies access to a wider investor base and the American financial marketplace.
Jumia listed the ADSs at $50 per share, but investors could buy these shares at various market prices. Interestingly, this move comes barely three months after the company raised $243 million from $8 million ADSs in December 2020. The shares were sold at an average price of $30 per share, but it initially listed them at $36.8.
In July 2020, when Jumia’s stock market rally began to show promise, the company filed a document with plans to raise cash by selling up to 18 million ADSs (36 million shares) as often as the company deems fit. The first batch helped raise $243 million.
The exact amount of funds that would be generated from this sale cannot be determined at this time. If the stocks do not fall below the current price, Jumia could gain anything from $360 million to over $400 million. If the stocks keep falling before the sale is completed, then the proceeds could be much lower.
Based on the company’s July 2020 records, there’s still, at least, 1 million ADSs (2 million ordinary shares) that it could use to raise funds in the future. Jumia reveals that it does not currently pay dividends on its shares.