AXA deal seen to create African ‘unicorn’

A deal whereby French insurance giant AXA is to pay €75m (£57.7m, $83.6m) for an 8% stake in a Nigeria-based, Africa-focused e-commerce business is set to make the Nigerian firm the continent’s first “unicorn” – that is, its first privately-held start-up company valued at more than $1bn, according to media reports.

As a result of the deal, AXA will become the exclusive provider of insurance products and services through an established African online retailer known as Jumia, one of nine e-ventures that are operated by Africa Internet Group (AIG), the entity in which AXA has invested, as well as through other AIG online and mobile platforms, a statement on AXA’s website on Monday said.

“Going forward, AXA’s African insurance companies plan to propose custom-made insurance products to Jumia and AIG’s e-commerce client base, through its ecosystem of marketplaces and classified services,” the AXA  statement added.

AIG was founded in 2012, and is currently active in some 26 countries, according to its website.  The AXA deal is expected to complete in the first quarter of this year.

Sacha Poignonnec and Jeremy Hodara, founders and co-CEOs of Jumia and AIG, said they foresaw Africa’s e-commerce and online businesses developing “rapidly” over the next few years, “as a result of the strong growth of the middle class, coupled with the increasing mobile phone and internet penetration”.

They added that the “extensive background in online business models” of Rocket Internet and MTN, two other major AIG investors with a strong existing presence in Africa,  added to the new “partnership with AXA in insurance products and services”, left the company in “a great position to continue to innovate and connect businesses to the fast-growing [African] consumer demand”.

‘Largest e-commerce mall’

Jumai, which AIG calls Africa’s “largest e-commerce mall” on its website, is currently active in 11 African markets and grew its transaction volume by 265% during the first nine months of 2015, to reach €206m, AXA said.

Currently the Jumai website carries everything from phones, tablets, clothing and sunglasses to toys and clothing for babies, healthcare products, and parts and accessories for automobiles. For the moment, at least, though, insurance products don’t yet seem to be on offer.

In a story on its website on Monday,  the Financial Times noted that the AXA deal, when completed, will give AIG a valuation of €938m, or $1.04bn, making it, in private equity parlance, a “unicorn” – and as such, Africa’s first such beast.

Altogether, there are some 151 so-called unicorns around the world, the FT added, citing as its source CBInsights, a venture capital database.

ABOUT THE AUTHOR
Helen Burggraf
Helen Burggraf is the editor of International Investment. A US-trained journalist, she has worked in Rome, New York City and London, covering everything from the fashion and retailing industries to the global drinking water and water-treatment sector, private equity, and most recently, the international cross-border financial services/advice industry.

Read more from Helen Burggraf

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