Great work (again) Naspers: Flipkart deal delivers 265% profit for shareholders

By Alec Hogg

As Naspers accounts for over 20% of South African equity portfolios, some analysts have raised concerns that the national savings pot is too heavily exposed to a single company. Which is fair comment, even if it has worked out unbelievable well so far, primarily because its $30m investment in Tencent is today worth $161bn – equal to roughly half SA’s GDP.

The Cape Town-headquartered company‘s management is trying hard to close a 40% discount between its own market cap and the value of the shares it owns in Tencent (which means shareholders gets Tencent at near half price and the rest of Naspers’ assets for free). Yesterday’s biggest ever retail acquisition, Walmart’s purchase of 77% of India’s Flipkart for $16bn, will surely help its cause.

Just like with Tencent, Naspers was an early stage investor in ecommerce company Flipkart, injecting a cumulative $616m into the business for just under 12% of the shares. It will bank $2,2bn after yesterday’s deal. CEO Bob van Dijk says the group decided to sell because with Walmart running the show it will have little influence in future “and we’re not a financial investor”.

It’s an approach that’s served the group rather well. Perhaps those “financial investors” who rule the capital markets will now start to realise Naspers ain’t no one trick pony.

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