Baillie Giffordthe Edinburgh-based asset management firm long known to have a penchant for pre-IPO tech companies has sold its shares in African e-commerce giant Jumia, according to the latest 13G/A Archiving released by the asset manager.
According to the filing, Baillie Gifford disclosed ownership of 18.75 million shares of Jumia, representing 13.69% of the company. In Jumia’s previous filing a year ago, the asset manager held 19.85 million shares and owned 10.06% of the company at the time. That’s a 5.50% drop in stocks and a 0.67% drop in ownership.
The Scottish wealth management company was an early backer of renowned private and public technology companies such as Amazon, Google, Salesforce, Tesla, Airbnb, Spotify, Lyft, Palantir and SpaceX well into its centenary. It has also invested in deals in other geographies, including China’s Alibaba and NIO, and Africa-based internet companies Naspers and Jumia.
Baillie Gifford bought Jumia shares in 2019, three years after the e-commerce giant went public. The Scottish mortgage bank, which belongs to Jumia largest institutional investor, has since sold and bought back a portion of its shares each January, with this recent move marking the stock’s biggest drop to date. Baillie Gifford remains the largest shareholder in the e-commerce platform.
Last November, after several years of loss reporting, Jumia made management changes after installing Francis Dufay as acting CEO to replace co-founders Sacha Poignonnec and Jeremy Hodara, who resigned from their co-CEO roles. The move was accompanied by immediate cuts across several product lines and layoffs, including the release of a few executives from the Dubai office. All this to chase profits that have eluded the company.
In the third quarter of 2022, the African e-tailer made significant progress in reducing its losses by 13% from $52.5 million to $45.5 million, the lowest in six quarters. Despite this progress, public confidence in the e-commerce outfit seems to have waned. Jumia saw its share price fall 51% over the past year and saw its stock fall to $3.88 per share following Wednesday’s news; it is trading just above $4 with a market cap of $404 million. The e-tailer ended the third quarter with a cash position of $284.7 million, of which $104.3 million was in cash and cash equivalents.
Baillie Gifford’s decision to sell some of his stock may have something to do with Jumia’s stock market performance. On the other hand, it could be the investment firm’s way of mitigating the mounting losses it began taking last year, particularly around growth stocks, which have taken huge blows in the face of rising interest rates and fears of a recession (last week, the investment group admitted 2022 was a “humiliating year” after it lost more than $14 billion in stakes in Tesla and Shopify, according to Financial times). But that doesn’t explain why the fund group, with more than $230 billion in AUM, has increased its exposure to other loss-making companies such as Chinese EV maker NIO and Wix.com over the past week. Jumia’s next earnings call next month should shed more light on the matter.
It’s not all gloom for Jumia, though, as other major shareholders including DE Shaw, Goldman Sachs and Bank of America took a different path and increased their shares in the company, up 2.21%, 1.27% and 1% respectively. .40%. per Nasdaq.