JOHANNESBURG ā Shining light on its investments other than Tencent is firmly on the radar of Naspers CEO Bob van Dijk. Thereās a value gap that shows investors are giving the company little to no credit for any investment outside of the Chinese Internet giant. The group is invested in a cross spectrum of companies across many geographies, including operations like Mail.Ru, Flipkart and more recently Delivery Hero. And despite selling a $9.8 billion stake in Tencent, (and the group’s subsequent $51bn market value loss over two days) Naspersā market cap is still around $38 billion lower than the value of its overall stake in the Internet company. In the piece below, Bloomberg chatted to Van Dijk who says it is a priority to reduce this value gap, and they will consider listing some businesses to highlight their value. – Stuart Lowman
By Loni Prinsloo
(Bloomberg) – Naspers Ltd., frustrated that investors give it no credit for its investments other than a stake in Chinese Internet behemoth Tencent Holdings Ltd., is considering listing some businesses on the stock market to highlight their value.
Naspers raised $9.8 billion this week selling a slice of its Tencent shares, and plans to use the money to accelerate the growth and scale of its e-commerce businesses, which could potentially be listed. Even after the sale, the value of Naspersā Tencent investment, about $159 billion, dwarfs the South African companyās market value of $121 billion. That means investors see no value in Naspersā payment services, food delivery and classifieds operations.
āIt is a priority for us to reduce the value gap,ā Chief Executive Officer Bob Van Dijk said in a phone interview on Friday. āOne of the things that we are actively discussing with our board is listing separate business units. The discount largely exists because of these structural market-driven reasons, so we are actively discussing this.ā
The problem is one that many chief executives would dream of having: Under Koos Bekker, Van Dijkās predecessor as CEO, Naspers invested $32 million in Tencent, the operator of the WeChat messaging service, in 2001, and the stake has grown so much that itās come to dominate investorsā perception of the company. Naspers owns 31.2 percent of the company after this weekās share sale.
Van Dijk is looking to close the discount by turning his other investments, such as the Romanian e-commerce platform eMAG, profitable. Naspers has invested as much as $10 billion in its online businesses at a return rate of 23 percent, excluding Tencent, he said.
āMore Profitableā
āThe return has given us the confidence that we can build even larger and more profitable e-commerce companies, and the sale of shares was done to get funds to deliver on that strategy,ā he said.
The publisher of South African newspapers and operator of pay-TV services has spent in excess of $2 billion over 12 months on acquisitions and organic growth, the CEO said, with the food-delivery business consuming $1 billion. Naspers invests in sectors that it has a grasp on and where it experiences good returns, according to Van Dijk.
āWe see further opportunity in these sectors,ā he said.
Solutions to the valuation gap with Tencent have to be structural and long-term, Van Dijk said. āWe donāt want to implement short-term decisions that will deliver a reduction of the gap, but is actually not the right decision for the company going forward,ā he said.
Buying back shares is a consideration once the company starts producing excess cash. āAt the moment we are consuming cash and we donāt think this is the right time to buy back our own shares,ā said Van Dijk.