Silent Coup? How Naspers was ‘stolen’ from Africa

naspers

For many people who do not know Naspers, I will not blame you, it is not a name that rings a bell, after all, how many people know Berkshire Hathaway, but when you link the name to Warren Buffet, it clicks.

That is exactly similar to the reason Naspers does not ring a bell to a typical reader of this article. However, for a quick tit-bit, you can call Naspers is the most valuable listing/public company in Africa with a market capitalisation of over $400 billion.

So you would ask, what did/does the company do to become this successful. Well, it was not this big. Starting out in 1914 as a newspaper company to spearhead Afrikaner nationalism (a mild word for a pro-apartheid newspaper), the company grew to become a media and entertainment giant, and recently (at least in the last 10 years), one of the largest technology and Internet holding companies in the world. So if you want to sound pejorative (like Western journalists would say), you can call Naspers ‘the Berkshire Hathaway of Africa or the ‘SoftBank of Africa’.

However, instead of Warren Buffet’s success in stock picking and making money from small companies before they go big, Naspers made its fortune in technology and investing Internet startups as seed investors and or growth investor but because most of the startups are often still very fragile and volatile with mostly zero profit to their balance sheets, Naspers is able to negotiate for a better share of equities in the company and when the experiment becomes a success, the company makes it big.

This was exactly how it turned out. In the late 90s when eCommerce, Internet search engines and social media were still in their fragile and experimental state, Naspers made a huge bet that ended up changing the course of its history for good. Tencent, a Chinese Internet company was in the lookout for seed investment to grow the startup and perhaps by coincidence, Naspers was reported to have staked $15 million on the company. It was a huge bet that could have gone up in smoke if the 2001 dot com bubble is anything to remember.

However, it paid off big time, Naspers became very lucky that a 15 million investment was worth several folds in value by the time Tencent Holdings listed as a public company. The largesse of Tencent was used by the company was a base to fund several other startups, many of which went ‘belly-up’ while some were just ‘disasters’ that could have been averted. While its investment in DSTV, Multichoice and MNet made the company popular and a cash company, Several other wannabe startups have ended up raking a stockpile of debt for the company. From its investment in Dealfish, Mocality Konga, Takealot and even OLX, Naspers has gained notoriety for experimenting with several unsustainable business models that seek to throw money at a business venture without looking at the peculiarities of the market and the fundamentals revolving around the industry.

Was Naspers pushing its luck too far, but that’s is a discussion for another day.

The crux of this article is the unreported or unnoticed heist at this ‘African pride’ of a company. The conspiracy is very subtle that if you don’t read in between the lines and your memory about Naspers history and heritage is fuzzy, you could wave it aside, it is just a conspiracy anyway.

This is because, by the time this article becomes a month old, Naspers will technically seize to be an African or even a South African company for that matter. In the early part of last month, Naspers announced that it will list its Internet startups on Amsterdam’s Euronext Exchange. From the face value, the move looks very ordinary, positive and progressive. However, like they always say- ‘the devil is in the details’. It was a plan to finally ax Naspers from its South Africa roots ad rightful home.

Here is why:

Naspers said in the announcement that:

NewCo will comprise all of Naspers’ internet interests outside of South Africa including, among others, its companies and investments in the online classifieds, payments, food delivery, etail, travel, education and social and internet platforms sectors. These businesses are some of the world’s leading and fastest-growing internet brands, such as Tencent, mail.ru, OLX, Avito, letgo, PayU, iFood, Swiggy, DeliveryHero, Udemy, eMAG and MakeMyTrip. NewCo is expected to be approximately 75% owned by Naspers and to have a free float of approximately 25%.

So technically, Naspers ‘deboned’ the company, taking away all the meat and juice parts leaving behind ‘scraps’ for the South African Naspers.

Seeing that the South African public could smell the ‘foul play’ the company countered itself in the statement that:

Naspers will retain its primary listing on the JSE, and will continue to directly hold its South African assets, Takealot and Media24, alongside its majority stake in NewCo. NewCo’s free float is expected to be created by Naspers through a capitalisation issue of NewCo shares to Naspers shareholders. Shareholders will also be able to choose to receive more shares in Naspers instead of shares in NewCo, subject to certain limits. This is intended to provide flexibility to shareholders.  It is intended that the board and governance structures of NewCo will mirror those of Naspers. Further details regarding the implementation of the Proposed Transaction will be provided in due course.

While showering the South Africa operations with platitudes, the company assured the public that:

After the listing of NewCo on Euronext Amsterdam, Naspers will remain the largest South African company listed on the JSE by market capitalisation, and Naspers will continue to invest in South Africa. Naspers is one of the foremost investors in the South African technology sector and is committed to building its existing internet and ecommerce companies in the country, as well as stimulating the local tech start-up sector through the Naspers Foundry.

However, the truth can only be hidden for a while. It would surely unveil itself. The planned listing of Naspers’ Internet startups and companies on Amsterdam’s Euronext exchange is more or less an exit of Naspers from South Africa and Africa in general. This is because last year, the company took some strategic decision to focus on its Internet startups out of Africa. The company also listed its entertainment arm, Multichoice Africa, a move that could see Naspers sell off its stake anytime it wishes. Naspers has also invested billions of dollars to ramp up acquisitions outside of Africa, while only committing less than $400 million to invest in African startups.

Seeing that Africa’s largest company has been taken away from them (or Africa), notable South Africans are now threatening fire and brimstone on the planned listing, calling it a coup and a theft of an African tech jewel from its home by foreigners.

Naspers’s Chairman Koos Bekker is now being accused of handing out the company by hiring former eBay executives who ended up purging the group’s board of South Africans and replacing them with ex-eBay executives.

So who could be doing this hatchet job for the ‘eBay’ or foreign takeover of Naspers from ‘South Africans or Africans’?

He is Bob Van Dijk, the CEO of Naspers. Bob is an ex-eBay executive who took over the reins of the company from Bekker.

In an article written by Andre de Wet, said Bob:

“has removed every single senior South African heading up any part of the company around the world, he has appointed all his mates and fellow eBay managers in positions of power around him. In the corridors of the Naspers buildings in the Cape they are calling the Naspers senior team the “eBay B-team”.

In his article he posted on Ventureburn, he accused Bob of using his position to takeover Naspers from its rightful home and abandoning the dream of the founders.

Whether all these allegations, insinuations are true is not really important. However, what might be sacrosanct is that Africa’s largest company will no longer be the same and to use the right statement, Naspers will no longer be an African company.