My Take: AIG (Jumia) Is Not Worth $1 Billion Value


What is the real worth of AIG? This is a big question that many are asking.

As Africa Internet Group, AIG, (Jumia’s parent company) raised another round of $243 million from Goldman Sachs, MTN and Millicom, the biggest fund ever-raised by a tech startup in Africa, the company did something rather incredible that Nigeria’s tech community either took with a pinch of salt or did not notice.

Sacha Poignonnec and Jérémy Hodara of AIG. Source:

AIG, a company that is less than six years in Africa, valued itself for $1 billion. This means that AIG is now Nigeria’s second ‘unicorn’ (a name given to tech companies that gets up to $1 billion financial valuation) after Interswitch Group. While one can swiftly dismiss this as a ruse and a move for AIG to get more private equity firms to bring more cash to their business, let us see things from their perspective.

Within its five years in business, AIG founded by the German tech conglomerate has raised about $380 million from its existing and new investors, that is about 30% of its valuation. The company floated over 71 different companies in Africa. These companies were built to either complement one another or derive scale for the group. Perhaps the value of AIG’s teeming companies is worth the remaining $620 to make the group a unicorn.

Juliet Anammah, CEO, Jumia Nigeria.

Also, Goldman Sachs a very reputable and sometimes controversial investment bank is one of the key investor in AIG. Goldman is fully in support of AIG and will no doubt be the one preparing and rubber stamping AIG’s valuation. Goldman is the third largest investment bank in the world by its $861 billion asset managed by the company, so to cut them some slack, it is assumed that Goldman should know better and its value of a $1 billion is sensible.

However, Sacha Poignonnec, AIG’s CEO, admitted to Financial Times, FT, that profitability is three years away from AIG, he “sees the world a bit like Amazon, in the sense that Amazon is not profitable because they see that they should still invest” and the company”profitable in the next three years”. So if the company still has three years to make profit (in their own forecast), how did AIG clock the $1 billion mark?

Here is the opposing view that AIG’s $1 billion mark might be a ruse. Jumia is the largest business out of AIG’s aspiring startups. Jumia’s lifetime customers in Nigeria is about 1 million. Nigeria being the largest market of Jumia in Africa should be a factual way of looking into its actual value. Analysts estimate that Jumia’s total sales in Nigeria since 2012 till date is about $100 million. If the 12 other countries where Jumia operates turn in same amount, that is $200 million, with its $380 million, it is still a far cry from $1 billion value, its other operations are paperweights for them to fill in the gap.

Oliver Samwer, CEO, Rocket Internet, AIG’s parent company. Source:

However, this writer is not ignorant of the fact that tech startups are not valued based on their assets, current profitability but their intrinsic value, market potential  and more importantly, unknown methodologies of their founders/investors. It is also doubtful looking at the antecedents of Goldman Sachs in asset valuation. In 2008 after the financial crisis, Goldman was under severe lawsuits from investors and American government over the value the company gave to asset backed mortgages it sold to investors.

If AIG were to be a public traded company, its value would be less than half of what it is currently quoting. A public company cannot be valued at will because the procedures/criteria are much more stringent and difficult to walk over.

It turned out that Goldman allegedly bought series of toxic mortgage backed securities, MBS, propped their value and sold it to institutional investors who then discover that the assets they invested in where worth less than tissue papers. Goldman paid a fine of $5.1 billion for its involvement in the whole saga. According to Investopedia “The terms of the agreement calls for Goldman to pay fines totaling $5.1 billion, of which $2.385 billion will be a direct fine. Goldman not only is to make cash payments of $875 million, it must provide $1.8 billion in consumer relief.” In case you do not understand the charges against Goldman, the company sold “have sold, securitizing or underwriting bonds to investors without letting investors know of the huge risks involved”. The risk involved was that the value of those assets are not stable and could go as low as zero. Does that ring a bell?

Lloyd Blankfein, CEO and Chairman of Goldman Sachs. Source:

To paint a small picture of what AIG might be facing, Jumia was reported in last October for  firing 300 staff, that is 30% of its workforce in Nigeria. The company has also fired many in other African countries. Even when other competitions of Jumia laid off staff as well, it is instructive that the hype about the Nigerian eCommerce space is deafening. eCommerce is accounting for less than 1% of total retail market, the business is far from rosy.

For AIG to be valued for $1 billion side by side Interswitch Group, is incredible. The general public should note that private companies like AIG can be valued at whatever amount its investors deem fit based on their own criteria. If AIG were to be a public traded company, its value would be less than half of what it is currently quoting. A public company cannot be valued at will because the procedures/criteria are much more stringent and difficult to walk over.

Here is my take: AIG does not worth $1 billion, however, investors are free to believe whom they want, but time will tell.

The thoughts and opinions expressed here are those of the individual contributor(s) alone and do not necessarily reflect the views of PageOne.

Leave a Reply

Your email address will not be published.