Naspers has pulled off a dramatic restructuring of its holdings to unlock value after the successful listing of Prosus on Euronext Amsterdam stock exchange and simultaneously on the Johannesburg Stock Exchange (JSE). Prosus Group is valued at EUR120 billion ($134bn) and is Europe’s biggest consumer Internet firm and the third in value on the Amsterdam bourse after Royal Dutch Shell and Unilever.
South Africa’s Naspers is Africa’s most valuable company and still owns some 73% of Prosus. It has spun off its global Internet investments into Prosus including the largest stake (31%) of China’s Tencent and the largest stake (28%) stake in Mail.Ru, a giant Russian internet company, reported to be worth $1.4bn.
According to an announcement in Amsterdam: “The Prosus Group’s businesses and investments serve more than 1.5 billion people in 89 markets, and are the market leaders in 77 of those markets. The Prosus Group’s consumer internet services span the core focus segments of classifieds, payments and fintech as well as food delivery, plus other online businesses including e-tail and travel. The Prosus Group aims to build leading companies that create value by empowering people and enriching communities.”
Other investments include Russia’s Digital Sky Technologies (which invests in Facebook, Groupon and Zygna), Indian e-commerce start-up Swiggy, Takeaway.com, Germany’s Delivery Hero, investment in Brazil and e-commerce in the Middle East through Souq.com as well as financial services firms PayU and Wibmo.
In May 2018 Naspers sold its 11% shareholding in India’s Flipkart for $1.6 billion after buying it for $616m (Walmart bought 77% of Flipkart for $16bn in its biggest acquisition as it sought to square up to Amazon and local competitors for domination of the growing Indian market.
Although Euronext Amsterdam bourse set a guide price of €58.70 per share, investor enthusiasm was high as the shares opened trading at €76 and reached a high of €77.40, up 32%, on the first day before closing the week at €73.90. News reports say the market valuation of Prosus is based mostly on the Tencent holding and does not count many of the other investments.
Unlocking value in Naspers
Naspers had made what has been described as “the best venture capital investment ever” when in 2001 it bought 46.5% of Chinese Internet tech company Tencent with an initial investment of $32 million, which had grown to $175bn in value by March 2018, according to Bloomberg. It has also made huge profits by selling some of its Tencent holdings but remained with 31.1%.
Naspers has been listed on the JSE since 1994, and its investors are predominantly South Africans including the Government Employees Pension Fund (GEPF), managed by the Public Investment Commissioners (PIC). Before the spinoff it made up 25% of the JSE’s total market capitalization, and investors had to scale back their holdings to avoid over-concentration, so that the total value of Naspers was less than that of its shares in Tencent, ignoring the other companies.
After the spinoff, Naspers share price fell nearly 30% and it became only 15% of the JSE market capitalization.
The Amsterdam listing opens the global holdings to a wider pool of investors and should permit reassessment of both the value of both Prosus shares- Naspers still owns some 73% of Prosus which has also – and allow for future capital raising. One of the biggest investors in Naspers is the South African Government Employees Pension Fund, managed by the Public Investment Commissioners.
$314m for African tech start-ups
Naspers is seeking to find similar media, e-commerce, consumer, fintech and other successes in Africa. It has appointed 48-year-old Phuthi Mahanyele-Dabengwa as CEO, its first black and first woman chief executive, according to Quartz. She was previously chief executive of Shanduka Group, an investment company founded by South Africa’s President, Cyril Ramaphosa. In October 2018 Naspers announced a $314m fund to invest into promising African tech start-ups.
History of Naspers
Naspers was set up in 1915 as De Nasionale Pers Beperkt (National Press Ltd) to promote Afrikaner nationalism and it continued to support the National Party over the decades until 1989, throughout apartheid.
The first newspaper was Die Burger in 1915 and magazine Die Huisgenoot in 1916 (both originally name De.. ). Naspers started publishing books in 1918. In 1985 it set up M-Net, the first pay-TV in southern Africa.
(Disclosure: the writer owns Naspers and Prosus shares)