The incredible story of Naspers is testimony to fact that success follows laser-like focus based on the right long-term vision. In this insightful interview with Naspers CFO Basil Sgourdos, the group has followed a similar playbook for decades: travel widely, expose yourself to global trends, take disciplined bets in promising areas, and as trends are confirmed, increase the scale of the bets. You could also describe the Naspers playbook as one of actively seeking out Fat Pitches globally and when they’ve been confirmed, taking a full swing. In this results-day interview, Sgourdos left me feeling the bets Naspers has been taking in online classifieds, food delivery and now blockchain, are likely to deliver excellent returns for shareholders. As for the early investment in Libra, Facebook’s new cyber-currency, another Tencent anyone? – Alec Hogg Â
Chartered accountant Basil Sgourdos was only 40 years old when appointed financial director at Naspers in July 2014. A PwC alumnus, he has experienced the spectacular Naspers story from close-up, having joined the business in 1994 when it was still a sleepy South African newspaper company with an interest in a small pay-TV operation.
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Sgouros started off as finance manager at the SA operation of MultiChoice before being deployed for a ten year spell to a subsidiary in Thailand and then promoted to oversee the development of the pay-television business in Europe. Like Naspers CEO Bob van Dijk, he is based in Amsterdam from when he spoke to Alec Hogg this morning – ahead of a busy day with investors and the yearend conference call with asset managers.
In the podcast he unpacks how Naspers is replacing cash flows lost through the MultiChoice unbundling (which generated $4bn in value for shareholders) through mushrooming revenues in other areas; pointing out the profitable e-commerce businesses – now accounting for over half the total investments in the sector – grew their contribution to group income by 44% to $406m in the year to end March.
Sgourdos also explains there is now $6bn in net cash on the balance sheet ($10bn gross). Much of this happened through actions in the past year where $10bn came in from the slight reduction in Naspers’s stake in Tencent (down from 33% to 31%) and the sale to Walmart of the group’s stake in Flipkart in India, which raised $2bn. Against that $3bn was re-invested into the underlying businesses: most notably $1.8bn into online classified advertising which has now turned positive.
The meaty part of the podcast focuses on how Naspers has stuck with the same template for decades – starting with a move into the mobile phone area; then pay-tv; then the internet – always re-inventing the core business and using the cash flows from mature operations to fund new bets.
The newest of these opportunities is blockchain – and such is the scale and reputation of Naspers today that it was invited to participate in the new Libra cyber-currency project at Facebook.
