Naspers CEO Bob van Dijk’s R1.72 billion share sale

Naspers CEO Bob van Dijk went on a selling spree after the company announced its buyback scheme, which split the market on whether the move was acceptable.

On 27 June 2022, Naspers announced the beginning of an open-ended share buyback program for Naspers and Prosus shares.

This program aims to shrink the gap between the shares’ net asset values and the price at which they are trading.

Naspers’ decision to buy back its shares told investors the company was convinced the shares were trading at a discount to the point of investing its own money.

The market welcomed the share buyback plan, and Naspers’ stock price jumped by 23% on the news, bringing much-needed relief to the shareholders.

However, it was not long before investors received conflicting signals from the Naspers management team and board members.

Shortly after the share buyback was announced, non-executive directors started selling millions of rands in shares.

The Naspers CEO did the same, selling R1.72 billion in Naspers shares in seven transactions amidst the buyback program.

During the same period, Naspers’ financial director Basil Sgourdos also sold R98.9 million in Naspers shares.

Naspers downplayed the significance of the share sale by its CEO and CFO, saying they remain strongly aligned with shareholders through their participation in long-term incentive (LTI) plans.

Protea Capital founder and CEO Jean-Pierre Verster said while it is never good when directors dispose of shares during a buyback, the situation with Naspers is different.

He said that because the Naspers and Prosus share buyback schemes are open-ended, it is unreasonable to expect directors not to trade within this period.

Others, including Counterpoint Asset Management executive director and portfolio manager Piet Viljoen, were less accommodating.

“Directors of Naspers are selling large chunks of shares while the company is in a buyback program. Have they no shame?” Viljoen said.

He previously said if Naspers’ management was truly concerned about creating shareholder value, they would unbundle their Tencent stake and give investors the full value of their holding.

Sasfin Securities’ David Shapiro explained that the South African investment community has always been a cosy club where no one wants to offend fellow members.

“It might result in a frosty stare in the dining room or failure to find a four-ball, or, more to the point, losing business. So, best you ignore it,” he said.

Naspers CEO Bob van Dijk’s share sale

Naspers CEO Bob van Dijk’s share sales over the last two years show what Viljoen and others are concerned about.

It revealed that Van Dijk seemed to have waited for the share buyback scheme to dispose of his Naspers share.

It is unclear why he would sell such a large holding if he believed the ongoing share buyback scheme would increase the share price.