S Africa’s Naspers notches Flipkart win

Bloomberg

Africa’s largest company just chalked up another major investment coup.
Naspers Ltd. netted a cool $1.6 billion profit from the sale of its 11 percent stake in Indian e-commerce startup Flipkart, a deal almost as lucrative as its sale of Polish online auction site Allegro in 2016. The move helps to line the pockets of the media and technology company, which is scouring the globe for investments to convince shareholders it’s on the right track.
With its roots in South African newspapers, Cape Town-based Naspers hit the jackpot 17 years ago with a speculative punt on then-obscure Chinese company Tencent Holdings Ltd. The initial $32 million outlay is now worth almost $150 billion — and that’s after Naspers sold off a chunk of the internet giant for almost $10 billion six weeks ago.
The problem is that investors value the whole of Naspers at less than its Tencent stake, suggesting they see every other part of the business as worth less than nothing. And that’s where the likes of Allegro and Flipkart come in. CEO Bob Van Dijk has vowed to close that valuation gap, and unlocking cash from the company’s myriad other investments helps to do just that.
“With this sale, our return on this investment was almost three times — it’s been one of our better investments,” Van Dijk said. Naspers retains several other Indian businesses, including online classifieds business OLX, food-delivery firm Swiggy and travel business MakeMyTrip, and remains heavily committed to the country, he said.
Walmart Inc., the world’s biggest retailer, is buying a 77 percent stake in Flipkart for $16 billion, and will be calling the shots henceforth.
Walmart declined to comment. “Walmart made it clear that they did not want all the major shareholders to be part of the deal,” Petri Redelinghuys, founder of Herenya Capital Advisors in Cape Town, said. “There was potential for Naspers to make a lot more money with Flipkart.”
With the US giant as majority shareholder, Naspers’s influence on Flipkart would have been significantly reduced, Van Dijk said.