FIRE SALE?

No one seems to know what was paid to buy one of Nigeria’s biggest e-commerce players

Quartz africa
Quartz africa

One week after the sale of Konga, one of the two largest e-commerce companies in Nigeria, there are still more questions than answers.

On Feb. 3, Zinox, a Nigerian technology firm, announced via story in a national newspaper it had acquired Konga after buying out shareholders, Naspers, Africa’s most valuable company, and Kinnevik, the Swedish investment firm. Zinox claims it now owns 99% of the company with 1% of the company held by an undisclosed minority shareholder.

As part of the deal, Zinox said it has taken over key Konga’s assets including an online mall with over 10,000 merchants, KOS-Express, an in-house delivery and logistics company and KongaPay, a mobile payment solution that’s helped ease the problems of online payments for the company’s customers.

But not so fast.

Even though dust around the news has barely settled, there’s still a distinct lack of clarity over the specifics of the deal. Zinox has disputed the $10 million price tag for Konga reported by local tech blogs. While a company spokesman told Quartz last week that the acquisition fee is “way higher,” Zinox is yet to confirm the actual value of the transaction. It insists however that the acquisition was a cash for equity deal. Zinox has been keen to suggest it paid more than $10 million, but there is a alternative view that it actually paid less. A lot less.

Nairametrics, a Nigerian business news outlet, citing sources in Nigeria’s Security and Exchanges Commission (SEC), the government agency that approved the deal, reports that Konga may have been “given to” Zinox with the latter paying a nominal $1 fee. The SEC has not replied Quartz’s email inquiries.

Kinnevik has also not replied to Quartz’s email inquiries. While both Konga and Naspers replied but declined to confirm the specifics of the deal, Naspers shed some light on why it pulled the plug on its bet on Konga’s prospects. Anika Ebrahim, communications director at Naspers told Quartz in an email that “despite various restructuring initiatives, the business has not reached the scale and level of profitability required to fund itself as it currently stands, now or in the medium term.” Ebrahim also said further funding from Naspers would not have met the company’s “target return requirements.”

That verdict is significant given that Konga is one of Africa’s best funded startups. Since it was founded in 2012, it has raised $78.5 million according to Crunchbase data.

For many in the local tech space, the general feeling has been disappointment that Konga was sold for less than its supposed value, given its funding history. Naturally, there has been some reflection as to what this means for the wider ecosystem.

But just as well, there has been an groundswell of solidarity for Sim Shagaya, the popular e-commerce pioneer, who founded Konga in 2012, from ecosystem stalwarts like Jason Njoku, founder of Iroko, a leading video on demand platform for Nollywood content. Shagaya is recognized as a leading figure in the tech community having started the company when startups were not as fashionable. He’s also been credited with bridging the gap between founders and investors.

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