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Africa’s top mobile phone seller Transsion lists in Chinese IPO
Chinese mobile phone and device maker Transsion has listed in an IPO on Shanghai’s STAR Market, a Transsion spokesperson confirmed to TechCrunch.
Headquartered in Shenzhen, Transsion is a top seller of smartphones in Africa under its Tecno brand. The company has also started to support venture funding of African startups.
Transsion issued 80 million A shares at an opening price of 35.15 yuan (≈ $5.00) to raise 2.8 billion yuan (or ≈ $394 million).
A shares are the common shares issued by mainland Chinese companies and are normally available for purchases only by mainland citizens.
Transsion’s IPO prospectus is downloadable (in Chinese) and its STAR Market listing application is available on the Shanghai Stock Exchange’s website.
STAR is the Shanghai Stock Exchange’s new Nasdaq-style board for tech stocks that went live in July with some 25 companies going public.
Transsion plans to spend 1.6 billion yuan (or $227 million) of its STAR Market raise on building more phone assembly hubs, and around 430 million yuan ($62 million) on research and development, including a mobile phone R&D center in Shanghai, a company spokesperson said.
To support its African sales network, Transsion maintains a manufacturing facility in Ethiopia. The company recently announced plans to build an industrial park and R&D facility in India for manufacture of phones to Africa.
The IPO comes after Transsion announced its intent to go public and filed its first docs with the Shanghai Stock Exchange in April.
Listing on STAR Market puts Transsion on China’s new exchange — seen as an extension of Beijing’s ambition to become a hub for tech startups to raise public capital. Chinese regulators lowered profitability requirements for the STAR Market, which means pre-profit ventures can list.
Transsion’s IPO comes when the company is actually in the black. The firm generated 22.6 billion yuan ($3.29 billion) in revenue in 2018, up from 20 billion yuan a year earlier. Net profit for the year slid to 654 million yuan, down from 677 million yuan in 2017, according to the firm’s prospectus.
Transsion sold 124 million phones globally in 2018, per company data. In Africa, Transsion holds 54% of the feature phone market — through its brands Tecno, Infinix and Itel — and in smartphone sales is second to Samsung and before Huawei, according to International Data Corporation stats.
Transsion has R&D centers in Nigeria and Kenya and its sales network in Africa includes retail shops in Nigeria, Kenya, Tanzania, Ethiopia and Egypt. The company also attracted attention for being one of the first known device makers to optimize its camera phones for African complexions.
On a 2019 research trip to Addis Ababa, TechCrunch learned the top entry-level Tecno smartphone was the W3, which lists for 3,600 Ethiopian Birr, or roughly $125.
In Africa, Transsion’s ability to build market share and find a sweet spot with consumers on price and features gives it prominence in the continent’s booming tech scene.
Africa already has strong mobile-phone penetration, but continues to undergo a conversion from basic USSD phones, to feature phones, to smartphones.
Smartphone adoption on the continent is low, at 34%, but expected to grow to 67% by 2025, according to GSMA.
This, added to an improving internet profile, is key to Africa’s tech scene. In top markets for VC and startup origination — such as Nigeria, Kenya and South Africa — thousands of ventures are building business models around mobile-based products and digital applications.
If Transsion’s IPO enables higher smartphone conversion on the continent, that could enable more startups and startup opportunities — from fintech to VOD apps.
Another interesting facet to Transsion’s IPO is its potential to create greater influence from China in African tech, in particular as the Shenzhen company moves more definitely toward venture investing.
In August, Transsion-funded Future Hub teamed up with Kenya’s Wapi Capital to source and fund early-stage African fintech startups.
China’s engagement with African startups has been light compared to China’s deal-making on infrastructure and commodities — further boosted in recent years as Beijing pushes its Belt and Road plan.
Transsion’s IPO is the second event this year — after Chinese owned Opera’s venture spending in Nigeria — to reflect greater Chinese influence and investment in the continent’s digital scene.
So in coming years, China could be less known for building roads and bridges in Africa and more for selling smartphones and providing VC for African startups.
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Africa’s top mobile phone seller Transsion to list in Chinese IPO
Chinese mobile-phone and device maker Transsion will list in an IPO on Shanghai’s STAR Market, Transsion confirmed to TechCrunch.
The company — which has a robust Africa sales network — could raise up to 3 billion yuan (or $426 million).
“The company’s listing-related work is running smoothly. The registration application and issuance process is still underway, with the specific timetable yet to be confirmed by the CSRC and Shanghai Stock Exchange,” a spokesperson for Transsion’s Office of the Secretary to the Chairman told TechCrunch via email.
Transsion’s IPO prospectus is downloadable (in Chinese) and its STAR Market listing application available on the Shanghai Stock Exchange’s website.
STAR is the Shanghai Stock Exchange’s new Nasdaq-style board for tech stocks that also went live in July with some 25 companies going public.
Headquartered in Shenzhen — where African e-commerce unicorn Jumia also has a logistics supply-chain facility — Transsion is a top-seller of smartphones in Africa under its Tecno brand.
The company has a manufacturing facility in Ethiopia and recently expanded its presence in India.
Transsion plans to spend the bulk of its STAR Market raise (1.6 billion yuan or $227 million) on building more phone assembly hubs and around 430 million yuan ($62 million) on research and development, including a mobile phone R&D center in Shanghai, a company spokesperson said.
Transsion recently announced a larger commitment to capturing market share in India, including building an industrial park in the country for manufacture of phones to Africa.
The IPO comes after Transsion announced its intent to go public and filed its first docs with the Shanghai Stock Exchange in April.
Listing on the STAR Market will put Transsion on the freshly minted exchange seen as an extension of Beijing’s ambition to become a hub for high-potential tech startups to raise public capital. Chinese regulators lowered profitability requirements for the exchange, which means pre-profit ventures can list.
Transsion’s IPO process comes when the company is actually in the black. The firm generated 22.6 billion yuan ($3.29 billion) in revenue in 2018, up from 20 billion yuan a year earlier. Net profit for the year slid to 654 million yuan, down from 677 million yuan in 2017, according to the firm’s prospectus.
Transsion sold 124 million phones globally in 2018, per company data. In Africa, Transsion holds 54% of the feature phone market — through its brands Tecno, Infinix and Itel — and in smartphone sales is second to Samsung and before Huawei, according to International Data Corporation stats.
Transsion has R&D centers in Nigeria and Kenya and its sales network in Africa includes retail shops in Nigeria, Kenya, Tanzania, Ethiopia and Egypt. The company also attracted attention for being one of the first known device makers to optimize its camera phones for African complexions.
On a recent research trip to Addis Ababa, TechCrunch learned the top entry-level Tecno smartphone was the W3, which lists for 3,600 Ethiopian Birr, or roughly $125.
In Africa, Transsion’s ability to build market share and find a sweet spot with consumers on price and features gives it prominence in the continent’s booming tech scene.
Africa already has strong mobile-phone penetration, but continues to undergo a conversion from basic USSD phones, to feature phones, to smartphones.
Smartphone adoption on the continent is low, at 34%, but expected to grow to 67% by 2025, according to GSMA.
This, added to an improving internet profile, is key to Africa’s tech scene. In top markets for VC and startup origination — such as Nigeria, Kenya, and South Africa — thousands of ventures are building business models around mobile-based products and digital applications.
If Transsion’s IPO enables higher smartphone conversion on the continent, that could enable more startups and startup opportunities — from fintech to VOD apps.
Another interesting facet to Transsion’s IPO is its potential to create greater influence from China in African tech, in particular if the Shenzhen company moves strongly toward venture investing.
China’s engagement with African startups has been light compared to China’s deal-making on infrastructure and commodities — further boosted in recent years as Beijing pushes its Belt and Road plan.
Transsion’s IPO move is the second recent event — after Chinese owned Opera’s big venture spending in Nigeria — to reflect greater Chinese influence and investment in the continent’s digital scene.
So in coming years, China could be less known for building roads and bridges in Africa and more for selling smartphones and providing VC for African startups.
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Chinese stocks plummet as Huawei CFO arrest raises trade fears
A string of Chinese stocks fell hard on Thursday after the arrest of Huawei’s chief financial officer Meng Wanzhou in Vancouver deepened concerns over U.S.-China trade tensions.
The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong was off 2.76 percent as of 12:40 p.m. On the Mainland side, the CSI 300 index of the top 300 stocks trading in Shanghai and Shenzhen fell 2.1 percent. The U.S. stock market is closed Wednesday to honor former U.S. President George H.W. Bush.
The crash arrived after Canadian officials detained Meng, daughter of Huawei’s founder and chief executive officer Ren Zhengfei, on suspicion that Huawei has violated American sanctions on Iran. Meng is facing extradition to the U.S.
Shares of Huawei’s main rival ZTE nose-dived nearly 6 percent in Hong Kong by midday. Meng’s news also hit the suppliers of employee-owned Huawei across the Asian stock markets. Among the worst performers is Shennan Circuit, which slipped nearly 10 percent in Shenzhen as of this writing.
Huawei and its main rival ZTE have been targets of the U.S. government that worries about the alleged ties between the telecom equipment makers and the Chinese government. The U.S.’s ban on ZTE sparks concerns that Huawei will face a similar fate. In April, the U.S. Department of Commerce announced a seven-year ban that would restrict American component makers from selling to ZTE, which in 2017 pleaded guilty to violating sanctions on Iran and North Korea.
Chinese stocks had been on a downward trend prior to Meng’s arrest as a result of rising U.S. tariffs over the last few months. In October, the Shanghai benchmark index dropped to a four-year low.
Updated with charts on HSCEI and ZTE.
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