E-commerce company Jumia, plans on raising funds by selling 18 million shares. The Africa-centered online shopping company on March 24, 2021, made a filing stating that it plans on raising millions of dollars from investors by selling nine American Depository Shares (ADS) and 18 million ordinary shares.
American Depositary Shares (ADS) refer to shares in foreign companies that are held by U.S. depositary banks and can be traded in the U.S., including on major exchanges. ADS are stocks offered by non-US companies, available to be purchased by US investors, and they allow foreign companies access to a wider investor base and the world’s most sophisticated financial marketplace. Public companies usually carry out this type of sales for debt financing purposes, or to facilitate growth.
The ADSs were listed by Jumia at $50 per share. This price is not fixed, per se, as these shares could be bought at various market prices by investors. An investor who bought the ADSs as at the time it was listed by Jumia may have bought it for the listed price of $50, or at a price close to that amount. But by now the ADSs will be at the current market price of $40.96.
Jumia’s recent filing of its sale of shares to raise funds is, interestingly, preceded by a fundraising which the online shipping company carried out in December 2020. In the fundraising done by Jumia, the company sold $8 million ADSs and raised $243 million. The shares were listed at $36.8 but were sold at an average price of $30 per share.
Jumia’s funding strategy dates back to July2020. In July 2020, when Jumia’s stock market rally began to look promising, 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.
Jumia’s stock had slid 25% from $50 to $40.96 per share as at press time, since it announced the filing of the ADSs. Based on the company’s July 2020 records, there’s still, at least, one million ADSs that Jumia could use to raise funds in the future.