Naspers disaster

Drikus Greyling • 15 December 2022

Naspers is promising investors that its eCommerce portfolio will be profitable by 2025, but many investors have lost trust in its management team to deliver.

Naspers’ success is a result of its large stake in Tencent. In May 2001, it acquired a 46.5% interest in Tencent, which operated an instant messaging platform in China called QQ.

Tencent showed rapid growth after the acquisition and became one of the world’s largest Internet and technology companies. It is also a global leader in the video game industry.

Its market cap peaked at over $900 billion in February 2021 but pulled back significantly following a crackdown by the Chinese government on large tech companies.

Over the years, Naspers has made numerous investments in search of its new big winner. However, it has failed to produce significant returns on its investments.

As part of their strategy, Naspers and Prosus have sold a significant portion of their Tencent stake to fund acquisitions and buy back their own stock.

Despite a buying spree in which Naspers and Prosus spent billions, many analysts doubt that their non-Tencent assets are worth much.

Naspers and Prosus continue to trade at a big discount to net asset value (NAV), which means that the assets they hold are worth much more than their market caps.

It shows that the market does not trust Naspers’ management, which is why many investors have called on the company to unbundle its Tencent position to unlock shareholder value.

The unhappiness with Naspers and Prosus’ investment decisions is growing as these companies are not performing well.

Ranmore fund manager Sean Peche is a vocal critic of Naspers’ management, saying they are behind significant value destruction.

Peche argued that Naspers and Prosus had created no shareholder value since 2019 because of their poor capital allocation.

Wayne McCurrie from FNB Wealth is more upbeat about their investments. He believes Prosus’ food delivery businesses will work, which is why he continues to hold Naspers and Prosus.

Naspers and Prosus’ investments analysed

To see how Naspers and Prosus’ non-Tencent investments performed, Daily Investor tracked the performance of its other listed assets.

To track the performance, we assessed what a R100 investment would be worth today if it was invested at the same time Naspers and Prosus bought the companies.

If the company did not trade publicly when the investment was made, the R100 would be invested during the IPO.

Prosus announced seven investments in listed companies. The funds invested into these companies would therefore be worth R700.

Today, the R700 investment by Naspers and Prosus would only be worth R412 – a holding period loss of 41%.

The table and charts below give additional information about Naspers and Prosus’ investments and their annualised returns.

Naspers/Prosus investment	Ending value of R100 investment	Annualised return
Similarweb	R25.74	-59.53%
Delivery Hero	R143.88	+8.42%
Skillsoft	R14.74	-61.60%
Remitly	R21.38	-70.89%
Trip.com	R71.72	-8.66%
Sinch AB	R89.65	-3.90%
Udemy	R44.51	-52.09%