Africa Internet Group (AIG) which owns online retailer Jumia and 9 other e-ventures—will receive €75 million ($83 million) from Europe’s AXA Insurance in exchange for 8% equity stake. AIG will use the funds to support all points of its business model aimed at expanding ecommerce services across Africa’s core economies. The investment buys AXA access to AIG’s expanding startup network.
“AXA not only sees this as an opportunity to invest in a company that will bring financial returns, they also see us as a great partner to accelerate distribution of insurance products in Africa,” AIG CEO Sacha Poignonnec said, “We have a solid ecommerce vertical across things like retail, travel, real estate and cars. First, we’ll use the investment to strengthen our existing businesses. Longer term we’ll look at launching new African companies and services and entering new countries.”
AIG’s best known venture is online retailer Jumia, one of Africa’s better funded startups, backed by $211 million in (known) VC from investors including Summit Partners and telecoms company Millicom. Since its inception in Lagos in 2012, the company now operates in 11 African countries selling everything from diapers to iPhones and microwaves. Jumia had recorded a growth of 265% over the previous year.
The equation for online commerce and financial technology (fintech) in Africa is bolstered by fast growing youth populations, expanding consumer power, and increased smart-phone penetration. Africa’s consumer spending is expected to reach over $1 trillion by 2020, increasingly amount of it shifting online. E-commerce spending in Nigeria, Africa’s largest economy is expected to reach $8 billion by 2025.
AIG’s Poignonnec points to greater diversity in many of Africa’s economies and the longer view for ecommerce, “Internet broadband and digital access will only improve across the continent. Many Fortune 500 companies we talk to are also realizing they need to make investments now to take advantage of digital consumer trends that will peak over the next 5 years,” he said.
If AXA’s $83 million stake represents an 8 percent equity stake in AIG’s ongoing 2016 financing that moves another Venture Capital backed African startup operation toward a $1 billion valuation. Stay tuned.