JOHANNESBURG: The most quoted company in Africa, Naspers Ltd., is struggling with an unusual problem: it made an incredibly good investment that has now become a headache.
Naspers bought a third of Tencent Holdings Ltd. in 2001, years before the WeChat messaging app operator became the most valuable listed company in China. The stake itself is now worth more than $ 100 billion more than Naspers ’market value, despite the company’s other profitable businesses in areas such as online advertising, payments and retail.
The difference has presented Naspers executives with the enigma of determining how to gain shareholder value without taking advantage of one of the world’s most successful technology companies. The problem has worsened as the gap widened to new levels last year, when coronavirus-induced concentration in technology stocks increased the valuations of Tencent and other technology companies.
“I don’t think there’s an older person at the group level who isn’t involved in thinking about this issue and working on it,” said Basil Sgourdos, chief financial officer of Naspers. Sgourdos said executives are exploring more than ten ideas to close the valuation gap, but did not want to delve into what options they are considering. Issues that any successful candidate will have to overcome include taxes, regulations, balance sheet structure and debt.
“With each idea and decompressing it, you learn something,” Sgourdos said. “It simply came to our notice then [intellectual property] in finding the final solution “.