Swedish tech investment company Kinnevik may have reduced the relevance of its stake in iROKOTV as it did not disclose the PayTV as one of its subsidiaries. In its 2017 annual report recently released, the Private Equity company did not list iROKOTV as one of its investee companies.
Updated: Scroll down to read the response from Kinnevik or continue with the article as originally published by Nairametrics.
Kinnevik has disclosed its interest in iROKOTV since it became an investor in the Pay TV startup. From our experience at reviewing annual reports from Private Equity or Venture Capital firms, not disclosing an investee entity in their annual report could indicate that it has been written down completely in the investor’s books or they no longer consider their investment relevant.
In its 2017 annual report, Kinnevick failed to list iROKO as one of its portfolio companies. In addition, the company reported that it had taken further write-downs on its investment in the Nigerian company.
A source, with knowledge of the iROKO and Kinnevik investment, indicate they still have equity in iROKOTV and have not sold and not looking to sell its stake.
NASPERS and Kinnevik recently sold its stake in Konga, an eCommerce company founded in 2012 by Sim Shagaya to Zinox Group. Also, we have received reports of a possible divestment move by Rocket Internet, from Jumia. Also recently online classified ads platform OLX also announced it is shutting down operations in Nigeria.
In 2013, iROKO secured another round of funding worth $8 million from the likes of New York’s Tiger Global, Sweden’s Kinnevik, and France’s Canal+. Kinnevik’s 2016 annual report valued iROKO at $72.9 million and put the value of their equity in the company at about $13.3 million (all figures using 2018 exchange rate).
The capital raised by iROKOtv was used to acquire content, enhance its London-based tech team and expand operations into Europe and North America, developing in the process the world’s largest online catalogue of African content, with over 5,000 movies.
iROKO was founded by Jason Njoku in 2012 as Youtube channel platform streaming Nollywood and African movies for local and global viewers. The company has since expanded into creating its own content with the incorporation of ROK studios.
Kinnevik is an industry focused investment company with the aim of building digital businesses that provide more and better choice.It was founded in 1936 by the Stenbeck, Klingspor, and von Horn families. Its shares are traded on Nasdaq Stockholm’s list for large-cap companies.
Update on Kinnevik’s response.
Before publishing this article, we sent an email to Kinnevik but we did not receive a response. However, Franco Danesi, an Investment Director at Kinnevik has responded with an explanation for the removal of iROKOTV from its annual report.
He explained that they have not completely written down the value of their stake in iROKOTv but that “the investment has been grouped under entertainment due to the limited size and Kinnevik’s reporting requirements”.
He also explained that iROKOTv is still included in its holding entity but was “not mentioned in their annual directly due to size.”
On whether there were plans to sell their stake in iROKOTv, he responded that “there are no plans to sell our stake.”
We also asked if the size referred to was due to impairments over the years. He responded that “it’s based on absolute size of the stake, not the impairment.”