LONDON — Naspers shares jumped to a seven month high this morning on news the group is to list its global internet interests on the Amsterdam Stock Exchange. The new company, which will include the 31% which Naspers owns of Chinese giant Tencent, will be the largest internet stock with a primary listing in Europe. As global investors will now have a more direct route into the group’s internet assets the separate listing is also sure to likely remove the South African discount which has long depressed the rating of the stock. Apart from thinly traded ADRs, Naspers’s previous entry point for investors was via the Johannesburg Stock Exchange, which introduced perceived risk for international institutions, while its dominance in that market (25% of the SWIX Index) forced many SA institutional shareholders to sell the shares. Naspers will retain its primary listing on the JSE, but the new entity, of which it will own 75% and which will exclude the group’s relatively modest South African assets, will have its primary listing in Amsterdam. The free float of the European listing will be created through the distribution of 25% of its equity to existing Naspers shareholders. South African investors will be able to trade through these shares via the new company’s secondary listing on the JSE. – Alec Hogg
From Naspers:Â
Naspers today announced its intention to list NewCo, a new global consumer internet group, on Euronext Amsterdam. NewCo will also have a secondary, inward listing on the Johannesburg Stock Exchange (JSE) in South Africa.
NewCo will comprise all of Naspers’ internet interests outside of South Africa including its companies and investments in the online classifieds, food delivery, payments, etail, travel, education, and social and internet platforms sectors, among others. They are some of the world’s leading and fastest-growing internet brands, such as Tencent, mail.ru, OLX, Avito, letgo, PayU, iFood, Swiggy, DeliveryHero, Udemy, eMAG and MakeMyTrip. NewCo is expected to be approximately 75% owned by Naspers and have a free float of approximately 25%. As Europe’s largest listed consumer internet company by asset value, NewCo will give global internet investors direct access to Naspers’ unique and attractive portfolio of international internet assets.
The transaction will be subject to the requisite regulatory and shareholder approvals being obtained. The proposed transaction is currently expected to be implemented no earlier than the second half of 2019.
Bob van Dijk, Naspers Chief Executive Officer, said:
“Forming and listing a new, global consumer internet group on Euronext Amsterdam is a significant step for Naspers. It will provide a strong platform to attract incremental investor capital, which is well-aligned to our growth goals. The listing will present an appealing new opportunity for international tech investors to have access to our unique portfolio of international internet assets. It will comprise some of the world’s leading and fastest-growing internet companies that are playing an increasingly important role in helping people improve their daily lives in some of the most exciting markets on the planet. As well as opening up investment to a broader category of investors, the listing aims to reduce our weighting on the Johannesburg Stock Exchange, which we believe will help us maximise shareholder value over time.”
Naspers has a long history of investing in technology to capture growth, transforming itself from a print media, pay-TV and video entertainment company into one of the top 10 global consumer internet companies by market capitalisation. In growing, the group has created significant value for its many stakeholders, however, this rapid growth has also created some unique market dynamics. Naspers now constitutes almost 25% of the JSE SWIX index, compared to 5% just 5 years ago, and its outsized weighting on the JSE exceeds most South African institutional investors’ single stock limits. As a result, many have been forced to sell as Naspers grows.
The proposed listing on Euronext Amsterdam is expected to help address this market issue and is the next significant action by management to create shareholder value. Recently, a number of actions have been undertaken by Naspers, including increasing the capacity of Naspers’ ADR programme, trimming its stake in Tencent, exiting several businesses, driving growth across its core internet businesses and turning its online classifieds business and several of its other early-stage investments to profitability. In addition, in early March 2019, Naspers unbundled MultiChoice Group Limited to existing Naspers shareholders creating a new, top-40 listed company in South Africa with an initial market capitalisation of $3.5bn. The move completed Naspers’ transformation to a global consumer internet company, with effectively all revenues and profits now coming from online.
Basil Sgourdos, Naspers’ Chief Financial Officer, said:
“We are aligned with our shareholders’ desires to maximise the value we create and also to address our weight on the JSE. We have therefore taken several actions in the past year or so, such as a trim of our Tencent stake, exiting several businesses including the sale of our Flipkart stake, driving the performance of our core internet businesses, and more recently, the listing and unbundling of MultiChoice Group Limited. After a careful and comprehensive evaluation of the merits of strategic options available to the group, the listing on Euronext Amsterdam proved to be the most promising for our future growth plans and addressing the market dynamics we wish to tackle.”
Naspers itself will retain its primary listing on the JSE in South Africa, and will continue to directly hold its South African assets, Takealot and Media24, alongside its majority stake in NewCo. NewCo’s free float is expected to be created by Naspers through a capitalisation issue of NewCo shares to Naspers shareholders. Shareholders will also be able to choose to receive more shares in Naspers instead of shares in NewCo, subject to certain limits. This is intended to provide flexibility to shareholders. Further details relating to the implementation of the proposed transaction will be provided in due course. It is intended that the Board and governance structures of NewCo will mirror those of Naspers.
Even after the listing of NewCo on Euronext Amsterdam, Naspers will remain the largest South African company listed on the JSE by market capitalisation, and Naspers will continue to invest in South Africa. Naspers is one of the foremost investors in the South African technology sector and is committed to building its existing internet and e-commerce companies in the country, as well as stimulating the local tech start-up sector through the Naspers Foundry. This is a R1.4bn investment commitment targeting technology start-ups in South Africa that seek to address big societal needs. This is in addition to the commitment Naspers made in October 2018 at the inaugural South Africa Investment Conference to inject a further R3.2bn into its existing South African businesses, which is already underway.
Information related to the proposed transaction can be viewed at www.newglobaltechgroup.com from 09:30am CET on 25 March 2019 and further information will be available in the coming weeks and months.
Naspers to separate Tencent stake, web assets in Dutch listing
Naspers chose Euronext Amsterdam to list a business that includes its 31% holding in Tencent, as well as investments in Russian internet platform Mail.Ru, German food delivery business Delivery Hero and Indian e-commerce startup Swiggy.
The listing, meant to attract international investors, is part of Chief Executive Officer Bob Van Dijk’s effort to reduce the gap between the Cape Town-based company’s market value of about R1.41trn ($97.9bn) and its Tencent stake. Naspers has been considering listings other than its primary one in Johannesburg, which some investors have encouraged.
Naspers, Africa’s largest company, accounts for about 25% of the Johannesburg Stock Exchange’s weighting, and has seen its value ebb and flow with the holding limits of South African institutional investors and emerging market sentiment.
“When the transaction is complete about a quarter of the Naspers market value will have moved from the JSE,” Van Dijk said in a phone interview.
Naspers dropped 0.5% as of 10:30am in Johannesburg. Shares of Tencent were down 3%.
The listing is a “judicious move to a larger pool of capital,” John Davies, an analyst at Bloomberg Intelligence, wrote in a note. Naspers still needs to demonstrate a track record of investment success, Davies said.
Naspers will still control the new internet unit, called NewCo until it gets a name, by owning a 75% stake, with the rest a free float, the company said in a statement.
Naspers got its start just over a century ago as a newspaper publisher focused on providing the first Afrikaans-language press. The company has since evolved into one of the world’s biggest tech investors. Its executives are based largely in the Netherlands and travel extensively, as they seek to replicate the Tencent bet.
Van Dijk said he chose Amsterdam partly because it’s a “great place to attract talent.” The listing requirements are very similar to the JSE and the company can keep the same management and board. Its tech unit will be the largest internet investment company on the Euronext and the third-largest overall, he said.
Van Dijk this month spun out the company’s pay-TV company MultiChoice, to focus Naspers entirely on consumer internet businesses.
