Update: this post has been updated – Transsion’s (makers of Tecno) closed at $6.48 billion valuation on its IPO debut, well ahead of $4 billion it was priced.
The Chinese smartphone company that’s taken Africa by storm had a gangbusters stock market debut. Transsion, which dominates Africa’s phone market with its Tecno brand, soared as much as 96% on its first day of trading on China’s Nasdaq-style stock market, briefly pushing its valuation to $7.7 billion.The stock later gave up some of those gains but still closed up 64%, valuing Transsion at 46.24 billion yuan ($6.48 billion).
Africa was Samsung nation before Tecno came. Today, Transsion (parent of Tecno, Infinix, itel) commands close to 47% of the market share. And based on that market leadership, Transsion is now worth about $4 billion. This is how CNN put it: “Chinese smartphone maker Transsion, which is dominating Africa with its Tecno brand, has raised nearly $400 million in an IPO on China’s hot new tech-focused stock market… pushes Transsion’s valuation to $3.95 billion”.
The Shenzhen-based company said in a stock market filing Wednesday that it sold 80 million shares for 35.15 yuan ($4.93) each, raising 2.81 billion yuan ($395 million).
The share sale pushes Transsion’s valuation to $3.95 billion and establishes the company as one of the biggest attractions on the Star Market, China’s answer to the Nasdaq.
The company said that its shares would begin trading “as soon as possible.”
Transsion — which also makes Itel and Infinix phones — doesn’t do business in China, despite being based there. But it controls a huge part of the smartphone market in Africa.
The interests on Tecno, and in extension Africa, are huge: “Its offering triggered a rush among investors. Only one in 20 online bidders were allocated shares, while only three in 1,000 offline bidders were successful.” Yes, as these investors were betting on Tecno, they were in reality believing in Africa since Tecno has no core strategic interest in pursuing the Chinese market at scale. My point is this: abundance is in Africa, but it has to be unlocked. Tecno did it for smartphones and it is having its moments. As the risks abound, so are the opportunities in Africa.
Just after hitting submit button on this piece which ran earlier this morning, I received this press release from Control Risk. Did you see Nigeria? Huge Risk but also massive Reward. That is the state of Africa in general – and if you want to eliminate all the risks, you will never buy a ticket from that Switzerland, Sweden or New York to venture into Nairobi, Lagos or Accra.
Tecno came with a new basis of competition – a parallel to anything Samsung was doing, picking to win from the flanks, as encapsulated by Sun Tzu in the Art of War. Before Teco, buying smartphone was in glass shops, but they made the process accessible physically and in monetarily terms, by working with shops in open markets to pursue the mission. That strategy has berthed a $4 billion company.
People, the opportunities in Africa remain unbounded but that does not mean that unlocking them is easy. But those that do will find glory. Tecno is having its moments.---