Naspers Frees Up Cash to Tap Flood of Investment Options

(Bloomberg) -- Naspers Ltd. has put aside the proceeds of share sales in Chinese internet giant Tencent Holdings Ltd. and India’s Flipkart to pay for new investments due to the abundance of opportunities in its preferred media and technology markets.

Africa’s biggest company by market value raised HK$76.9 billion ($9.8 billion) in March by selling a 2 percent stake in Tencent -- its flagship asset and by far the most lucrative. Naspers then netted a $1.6 billion profit from the sale of a stake in Indian e-commerce startup Flipkart to Wal-Mart Inc. in May.

“The reason why we freed up the money is that there is a lot of opportunity to invest at the moment in our core growth sectors: Food delivery, classified or in our payments business,” Chief Executive Officer Bob Van Dijk said in a phone interview Friday, after Naspers reported a 72 percent rise in full-year earnings. “That is where the bulk of the money will be invested in.”

The South African company has long relied on its stake in fast-growing WeChat creator Tencent to accelerate profit growth, yet its myriad investments in newer online companies around the world are beginning to bear fruit. Classifieds businesses in Brazil and Russia helped to generate the first-ever profit at the division -- when U.S. app Letgo is excluded -- while Naspers is working to improve profitability at Africa’s largest pay-TV provider.

To further reduce the discount to its Tencent stake, Naspers is making progress in considering different structural changes to the business, including the separate listing of certain business units, said Van Dijk.

Car Sales

A recent new investment was the $89 million spent last month on Berlin-based Frontier Car Group -- a vehicle-sales company that operates both online and out of physical lots. “People want an easy, hassle-free way to sell their cars,” Van Dijk said. “The model is being replicated by Frontier Cars in Africa, Latin America and Asia. There have to be local tweaks to make it work, but the concept is a very good one.”

Core headline earnings per share, which exclude one-time items, were $2.5 billion in the year through March, Cape Town-based Naspers said in a statement Friday. The company raised the dividend by 12 percent to 6.50 rand a share.

The shares gained 3.1 percent to 3,315.27 rand by the close in Johannesburg, the biggest rise since June 1, giving a market value of 1.5 trillion rand ($111 billion).

©2018 Bloomberg L.P.

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