Naspers, the most valuable company on the Johannesburg Stock Exchange, will prioritise investments in classifieds, financial technology and food – activities that it could possibly hive off with separate share listings in the right circumstances, according to CEO Bob van Dijk.
The focus on classifieds includes AutoTrader in South Africa and global online marketplace OLX, which van Dijk says has more monthly users than Twitter, at 350 million.
He sees big opportunities for fintech in India and Latin America, where it can be used to link the unbanked with savings, credit and payment services.
The food market, meanwhile, will “drastically change” within a decade, with fewer people preparing their own meals and instead opting for the efficiency of ordering in, the CEO told reporters at an evening media briefing on Friday, April 12.
Naspers, which has dominated the JSE Top 40 Index through its 31% stake in the Chinese internet company Tencent, is already planning to split its business into two units, putting its offshore assets in one that is so far known as ‘Newco’. It will have a primary listing on the Euronext Amsterdam stock exchange, possibly in the second half of this year, and a secondary listing in Johannesburg.
Possible separate listings
“Our priority is to make this work. We think it’s a big step, but it certainly doesn’t preclude us from thinking about those kinds of actions,” said Van Dijk, referring to potential separate listings for the three core investment areas of classifieds, fintech and food. “We have listed companies in the past.”
The Netherlands listing may help alleviate concerns that Naspers’s shares are trading below what its assets are worth because of the difference between the value of its Tencent holding – about R1.9 trillion – and the entirety of Naspers at only about R1.4 trillion.
Newco, which Naspers expects to be Europe’s largest listed global consumer internet company, includes investments in Indian internet and food companies such as Swiggy and MakeMyTrip, Russian internet companies Avito and Mail.Ru, and OLX. Naspers has a 75% stake in Newco and 25% will be apportioned to Naspers shareholders, according to the company.
The new listing may also address how Naspers holds significant sway in the JSE Top 40 Index. It represents about 25% of the value of all 40 companies, with the result that Naspers share fluctuations overwhelm the influence of other stocks in the index, putting off some investors who use the index as a hedge or part of a diversification strategy. Naspers’s large size also forces some institutions that have limits on their Top 40 holdings to divest shares as the company’s weight in the index grows, Van Dijk said.
Too big for comfort
“It means [that] whenever your share price goes up, people have to sell,” the CEO said. “That’s actually quite meaningful. That adjustment has hurt us. While the company is doing quite well, there has been massive selling by domestic investors, not because they hate us, but just because we became too big.”
Van Dijk said he is also concerned about the outflow of investor money from emerging markets such as South Africa in the past few years. Investors often sell Naspers since it is a liquid stock. The company’s desire is to use Newco to tap new pools of capital in Europe, including more technology investors.
“We’re attracting more capital to the company rather than less, and on the other side our weighting on the JSE goes down by a chunk which reduces that pressure to sell at least for a certain amount of time,” Van Dijk said. He expects the new listing “to address the core two issues that have been making our life harder”.
“We want to make sure we implement it well and execute it well, and we’ll see some positives.”