African tech can produce surprises. One this week is a $1.2 million Series A startup buying part of a $1 billion company.
That’s what Lagos based property startup ToLet.com.ng has done, purchasing Jumia House Nigeria for an undisclosed amount. Jumia House is a subsidiary of the continent’s lone tech unicorn -- Pan-African e-commerce giant Jumia.com.
ToLet and Jumia House Nigeria will merge platforms under the new name of PropertyPro.ng.
The acquisition was a result of ToLet’s strength in market and help from their lead investor, Malaysia based Frontier Digital Ventures, according to CEO and Co-Founder Fikayo Ogundipe.
“This came about from FDV―which has a strong real-estate classified portfolio across Africa―looking at which markets they were strong and where Rocket [Jumia’s lead investor] was weaker,” he told TechCrunch. “In Nigeria Jumia House was number three or number four in online listings. It didn’t make sense for Rocket to burn more capital in that position, so [FDV] approached them on the acquisition.
So how did ToLet finance the purchase? Without additional financing from lead investor FDV, according to Co-Founder Sulaiman Balogun. “The $1.2 million in funding we announced last year is the only round we’ve disclosed. We’ve raised enough capital to run through this deal and really fund the business and grow,” he said.
With the acquisition, ToLet is acquiring the entire Jumia House platform -- staff, assets, and their listings and agent network. The new PropertyPro entity will combine ToLet’s 60,000 listings to Jumia House’s 22,000 to create the largest online real estate listings platform in Nigeria with 65 percent of the market, according to Balogun.
ToLet would not divulge annual revenue stats, but execs explained it makes money from agent subscription fees. ToLet’s legacy platform had 10,000 agents, of which 20 percent were charged.
“We have a long-term plan to charge a higher percentage on our the premium plan,” said ToLet CEO Ogundipe―noting agents receive more options under that plan.
ToLet’s new PropertyPro platform will not charge fees or commissions on listing sales, something some of its competitors do, according to Balogun. “We did that on our previous model, but stopped. That increased the number of agents on our platform and generated more revenue overall,” he said. ToLet’s current online listings are about 70 percent rentals and 30 percent sales.
Co-CEOs Balogun and Ogundipe said to expect updates on the integrated PorpertyPro platform. They have engineers developing new ease of search features for the site and plan to launch an android app in coming weeks.
A prime aim of the acquisition and new PropertyPro platform is to expand ToLet’s agent and listings reach across Nigeria and increase the number of sales listings, Balogun told TechCrunch.
As a market, Nigeria boasts the dual distinction of being Africa’s most populous nation and largest economy, valued at roughly half a trillion dollars. A small real-estate sector (circa 8 percent of the overall economy) and a high urbanization rate have created a housing deficit in the country. Furthermore, a nascent credit rating market in the Nigeria has fueled practices whereby landlords can require advance deposit of up to two years rent from tenants.
ToLet hopes its recent acquisition and upgraded PropertyPro platform can ease that.
“We believe creating more visibility of real estate listings and ease of connecting buyers and sellers online can solve some of these liquidity problems and bridge this gap between supply and demand,” said Co-Founder Sulaiman Balogun.
This article originally appeared on TechCrunch.