Q&A: Van Dijk defends Naspers's dual shareholding structure - TechCentral

Q&A: Van Dijk defends Naspers’s dual shareholding structure

Naspers CEO Bob van Dijk

TechCentral editor Duncan McLeod spoke to Naspers CEO Bob van Dijk about the group’s acquisition, through Naspers Foundry, of a stake in SweepSouth, the Competition Commission’s attempt to block its acquisition of WeBuyCars, the controversy over the group’s dual shareholding structure, and its imminent listing of its new international Internet group Prosus on Euronext Amsterdam.

Duncan McLeod: Naspers Foundry has announced its first investment in South Africa, a R30-million investment in Internet-based domestic cleaning service SweepSouth, and said more deals are coming soon. Can you give us some colour on what sort of businesses you’re looking at currently and the size of the deals you are looking to make?

Bob van Dijk: What is important for us with Foundry is we are looking at things that can address a significant societal need and that can scale, definitely to a big size in South Africa or even beyond South Africa. We typically look at earlier-stage business — your typical Series-A and -B-type investments — and not businesses that are very large, but companies that have already proven that they have traction and can grow to be a significant force in South Africa.

We probably won’t be doing, say, a R500-million investment — that’s unlikely in Foundry, though we may do it as Naspers. We have done a significant investment in South Africa that is still pending competition approvals: WeBuyCars. That size of investment won’t be done out of the Foundry team, which is looking at earlier-stage (companies). Within that, it can be different things. SweepSouth is one we call online to offline — using online solutions to make the offline world better. We like that, and we have done more of it elsewhere. We also like financial services that help people. We are also looking further afield, as long as we see it as an area that can help make people’s lives better and can have real scale over time.

McLeod: You mentioned the WeBuyCars acquisition. The Competition Commission has come out quite strongly and said it’s going to seek to stop that deal from happening. Have their been any developments on that front?

Van Dijk: No, we think that decision is incorrect. If you look at the amount of competition in that space, in the overall second-hand car market, it’s huge. If you look at the position we have as a percentage of the total, it’s absolutely tiny. It was an incorrect decision, which we intend to appeal. I think we have a very strong case there.

Interestingly, we will use dollar capital to invest in this business to grow it further, which is the kind of thing that should be helpful for South Africa rather than being undesirable.

McLeod: There was an article on Bloomberg a few weeks ago criticising the dual shareholding structure, which has existed in Naspers in South Africa but which will now also apply to the Euronext listing in Amsterdam. That article said the structure is unfair to ordinary shareholders. What is your reaction to this criticism?

Van Dijk: The structure has been in place for a long time and has been approved by our shareholders. It’s not something we made up. NewCo (now named Prosus, and which will list on Euronext) will have the same structure as Naspers shareholders approved previously. So, I think that argument is flawed.

The structure has allowed us to think long term, to make investments that have created enormous shareholder value. I don’t think, at least in South Africa, that there’s a company that has created so much value for its shareholders as we have. It’s helped us to create clarity around the ultimate ownership when we invest and there is clarity around our identity, and it has served shareholders over time extremely well.

When shareholders have had issues, we have been extremely responsive. In fact, the NewCo listing is in response to what we think will help our shareholders get long-term value, so we don’t see it that way.

McLeod: Equity markets have been quite frothy for same time, particularly in the technology space. If there was to be a market crash between now and your listing of Prosus in September, would you proceed with the listing?

Van Dijk: We are not planning to raise any new capital in the listing, which means we are not very dependent on market circumstances. We are allowing our existing shareholders to elect into shares in Prosus … and therefore, even if market sentiment is not brilliantly positive, we don’t expect that to impact the timing.  — © 2019 NewsCentral Media

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