Zinox to hit goldmine if Nigeria’s e-commerce company, Konga, achieves $4bn projected valuation

Zinox Technologies Limited, the Leo Stan Ekeh controlled original technology equipment manufacturer (OEM) and integrated ICT company, which acquired Nigeria’s e-commerce major player, Konga, for what analysts have described as cheap, may be hitting the goldmine with that acquisition if a projected valuation of $4 billion for Konga is achieved, analysts who cover technology have told business a.m.

Snippets of what appears to be what has been going on since Zinox acquired the company have emerged in the form of serious work on strategy, including a possible merger of the company with Yudala, a company that is part of the Ekeh family chain, founded by Leon Stan-Ekeh’s son, Nnamdi, and principally run by him and his sister. A tie-up between Konga and Yudala is being talked about, although publicly denied by the company.

Konga is Africa’s biggest online mall and a projected market valuation of $4 billion is being seen as an opportunity to open a window for massive employment in Nigeria and across the African continent, especially when Nigeria eventually signs the African free trade area agreement.

Leo Stan Ekeh, chairman of Zinox, told a gathering in London at the Africa Summit, that modalities are being worked out, which many interpret to mean the company is now putting all the strategies in place to sweat value out of the company it acquired in January and sustainability is said to be paramount in the blueprint being put together, business a.m. has learnt, although Ekeh was not giving details just yet.

At the Africa Summit in United Kingdom Ekeh said the new management of the online business was putting structures in place for the empowerment of millions of Nigerians and Africans by extension, noting that Africa was a continent on the rise and disclosed that technology is key to solving some of the contemporary problems faced by African economies.

Konga, which was launched in 2012, was acquired in January 2018 by Zinox Technologies Ltd, an integrated information and communication technology (ICT) solutions conglomerate in a deal which total price is currently undisclosed by the management of Zinox, though industry sources say it is estimated at over $10 million.

Available details of the deal indicate that Zinox , also an original equipment manufacturer (OEM), assumed ownership of Konga.com, Konga’s e- commerce platform, KOS-Express,the logistics arm of the company; and KongaPay, its integrated mobile money payment channel.

Before its acquisition by Zinox, industry sources say Konga was valued at a little less than $150 million.

According to sources, after its launch in 2012, it raised $3.5 million in seed investment from Kinnevik AB, a Swedish investment company, while in another fundraising exercise in 2013, it raised $10 million from Kinnevik AB and Naspers. Over a five -year period, Kinnevik reportedly invested $36.1million in Konga, while Naspers invested $91.2 million.

The company in November 2017, cut nearly 60 percent of its staff strength, citing the need to run leaner operations before it was acquired two months later by Zinox.

Former shareholders, Kinnevik AB and Naspers that had sourced much of the fund Konga raised since its launch, were bought out at an undisclosed figure but sources hinted that it was likely at a loss.

Kinnevik AB in a report in 2017, disclosed that Konga was on its way to profitability after years of losses. Industry sources hint that Konga’s rival, Jumia, posted a net loss of about $61 million during the same period. There are indications that another large e-commerce platform , Yudala , which is currently in a merger with Konga, hopes to see profitability by 2020.

Nigeria’s e- commerce industry is projected by financial experts to rise to a $50 billion valuation over the next decade. Analysts say with mobile telephone coverage currently at 77 percent of the Nigerian population of 185 million, and an Internet penetration rate of 50 percent, the opportunities are enormous.

According to a recent study by Disrupt Africa, an online firm that monitors Africa’s tech start-up landscape, Nigeria maintains dominance
of the African e-commerce landscape and is on the brink of huge e-commerce success. Disrupt Africa gave hint that Nigeria appears ready to become the first African country to truly take retail online on a similar scale to Western markets.