#BounceExclusive: What We Know About ToLet’s Acquisition Of Jumia House Nigeria
ToLet.com.ng is one of Nigeria’s e-commerce companies that has weathered the entrepreneurship storm over the past five years.
Started by four young Nigerians - Fikayo Ogundipe, Sulaiman Balogun, Dapo Eludire and Seyi Ayeni – ToLet ventured into the highly murky and fragmented property market in Nigeria hoping to make house hunting a less herculean task using technology.
Like any other Nigerian tech startup, ToLet was starved of investment capital until September 2016 when a foreign investor, Frontier Digital Ventures, FDV invested 1.2 million dollars in the online property classifieds.
This Series A investment heralded a bigger role ToLet would play in the online property market in Nigeria.
On the second week of November, ToLet stepped up announcing the acquisition of Jumia House, another prominent player in the online property market owned by Rocket Internet’s African Internet Group, AIG.
In a statement to announce the acquisition, ToLet said it consummated the deal with its lead investor, FDV, adding that it would merge the two platforms over the coming months under a new name, ProperyPro.ng.
However, it was not long after this announcement was made that several concerns from some quarters began to emerge.
First, some people questioned how ToLet was able to fund such acquisition since it was not known to have such financial muscle.
Others wondered if ToLet raised up to $1.2 million from FDV as they claimed last year.
But while speaking on Bounce TV's Talking Tech programme on Tuesday, co-founder and Chief Operations Officer of ToLet.com.ng, Dapo Eludire shed some light on the details of the acquisition.
Below are 4 things we know about the deal:
1. Tolet Paid For Jumia House Nigeria Acquisition In Cash: The idea of acquiring Jumia House Nigeria came from ToLet’s lead investor, FDV.
According to Eludire, when the deal was about to commence, ToLet was approached and asked to indicate interest in the acquisition of Jumia House Nigeria.
This, it did and with the help of FDV paid cash for full acquisition of Jumia House Nigeria.
2. ToLet’s Change of Name Has Nothing To Do With The Acquisition: In the business world, acquisitions do not usually trigger change of brand.
But that is exactly what played out in ToLet’s acquisition deal.
The announcement for change of name came simultaneously with the acquisition deal. This led some to wonder if this was a merger or an acquisition or was there anything more to it?
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But Eludire had this to say: “For us, the change of brand has nothing to do with the acquisition of Jumia House. But the acquisition became an opportunity to give a better interpretation of our service to our customers and users.”
“Jumia House had always had a good sales proposition to agents and people who just wanted to buy houses and ToLet was not having a lot of that, so the acquisition is going to help us to provide more leads to agents and more quality listings to users who are willing to buy property.”
3. ToLet Bought Jumia House Because It Was Doing Well: Although it is curious how Jumia House would sell the company if it is indeed doing well, Eludire said the main reason ToLet was even interested in the deal was because “Jumia House was doing well”.
Some observers in the real estate industry believe is that it was just an exchange of portfolio between the owners of Jumia House and ToLet’s investors that necessitated the acquisition.
But Eludire said, on the contrary, ToLet agreed to the deal because it believed Jumia House was “doing well, especially in the part that we were not seen to be doing well, which is property sales.”
4. ToLet Is Yet To Cash Out The Entire Investment By FDV: ToLet raised $1.2 million from FDV.
That was the information that was made available to everyone. But a quick review of FDV’s investment files at the Australia Stock Exchange where FVD is listed showed it invested a lesser amount on ToLet.
But Eludire told Bounce News that this was only a result of poor understanding of how the investment was structured.
“We definitely signed a deal of 1.2 million dollars, even FDV in their own PR also reported the investment and exactly how much that was invested,” stated Eludire.
“I think it is a misconception from people who really wanted to check out if this investment deal actually happened. They were looking at the wrong statements. They were looking at financial records rather than the deals signed,” he said.
He added: “The truth is that the money was to be doled out in tranches. So, the document that the person was looking at was when the first tranche happened.”
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