iROKO Finds The Right Soil In London, IPO At $100M Coming

iROKO Finds The Right Soil In London, IPO At $100M Coming

Nigeria’s pioneering subscription video on demand, iROKOtv, is planning to list on London’s Alternative Investment Market within a year. Founded by Jason Njoku and Bastian Gotter in 2011, IROKOtv houses the largest catalog of Nollywood film digital content.

West African film-streaming service IrokoTV will seek to list on London’s Alternative Investment Market within the next 12 months, CEO Jason Njoku tells The Africa Report.

The sale would aim to raise between $20m and $30m, and would value the whole business at between $80m and $100m, Njoku says from his base in Accra. Discussions with brokers will start in the coming weeks, says Njoku, who holds a stake of 18% in the debt-free company.

Iroko has the world’s largest online catalogue of Nollywood films. Njoku has redefined the company’s strategy to target diasporic markets in Europe and North America, rather than growth in its main West Africa markets of Nigeria, Ghana and Côte d’Ivoire.

As you can see, iROKO has a valuation of $100 million despite raising tons of money in its decade history (of course, it has also exited properties like ROC studio). Contrast that with Paystack which exited at $200 million, after operating for four years, and having raised below $11 million.

The fact is this: fintech delivers more leverageable factors in Africa than any sector at the moment, and that is the reason why investors are pouring money into it. This is not to say that other sectors are not doing great. The point here is that fintech produces better numbers and those help to boost the valuation.

In Nigeria alone, Mastercard estimates that of the $301 billion yearly consumer transactions, a high percentage remains off-digital, implying that opportunities exist for fintech firms.  Of course, the SVOD has opportunities but broadband connectivity remains a challenge in the continent.

Consequently, iROKOtv has refocused on non-African markets, and listing in London looks natural. More than 80% of its revenue comes from outside Africa, and listing this company in Lagos or even Johannesburg would have been a big mistake. Those markets do not have respect for technology companies at the early phases. London certainly would like to have an iroko – it has more fertile grounds there!

It should not come as a surprise to anyone: selling video streaming products in Africa is a hard business. It is a double whammy for most potential customers: pay subscription fees and then cover the broadband costs. So, it was not entirely unexpected when iROTOtv announced that it was refocusing out of Africa: “Over the next week, IROKO will be defocusing our Africa growth efforts and we will revert to focusing on higher ARPU customers in North America and Western Europe. Even after pushing incredibly hard in Africa for the last 5 years, our international business represents 80% of our revenue today…” This is really a smart move as now the company can focus where it can earn U.S. dollars; I made that case a few days ago when I explained how Nollywood producers are focusing on international markets.

Nollywood

Yet, while $100 million may not look big in this age of inflated valuation, according to Jason, everything is coming just fine. We wish iROKO great luck as it searches for the right soil to grow in London.

“We don’t need more. To be honest, $10 million to $15 million will be for corporate development; the rest will be secondaries for shareholders. As a private company, IROKO’s valuation was never priced above $70 million so anything in our target range wouldn’t be a down round at all,” he said. “Especially if you consider in that time we exited ROK for close to the total amount of capital we raised for IROKO; we have returned $11 million to early investors and shareholders already. We still have material capital left from the ROK-Canal+ acquisition coming in every six months until 2023.”

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One thought on “iROKO Finds The Right Soil In London, IPO At $100M Coming

  1. iROKOtv can’t be a good benchmark to see how video streaming platform could fair here, because it has many flaws that to even list them alone, I will ask for top dollars. Hopefully we will be able to address that within two years from now…

    As for whether fintech delivers better returns or what excites investors more, I think we need to be very careful here. Fintech is not a productive sector, and if we really care about development of this continent, we need to be intentional about it. What are you going to develop in the fintech space that is exportable? The foreign investors who prefer to put more money there don’t do so because they care about Africa, to them, it’s a sector with quick win or returns. What we need here to advance is deeper and more complex than celebrating amalgam of fundraising in the fintech space.

    Everyone is still posturing and angling to ‘process’ the much talked three hundred billion dollars of transactions that are largely cash based, and how about turning it into a trillion dollars annual transactions? That is where the the problem of unemployment and insecurity can get a breather, creating multiple fintechs cannot address this real issue, it requires intentional and committed investment.

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