Africa’s most valuable public company - Naspers
- Pedro De Carvalho
- Feb 1, 2022
- 2 min read
As of November 2021 the company Naspers, listed and traded on the Johannesburg stock exchange, has a market cap of 1.20 Trillion ZAR, corresponding to around 77 billion USD. With this valuation Naspers is the most valuable listed company in Africa, but how did this come to be?
Naspers was founded in 1915 by members of the Afrikaans National Party in the city of Stellenbosch. The company was created to be a publisher of newspapers and magazines, and it was initially named De Nasionale Pers Beperkt, Afrikaans for National press, which was later shortened to Naspers. Due to this association with the National Party, Naspers inevitably played a big role in the apartheid. Many viewed Naspers as the mouthpiece of apartheid supporters, as it used its publishing power to put forward black oppressing ideals. There is no doubt that Naspers was a key culprit of the South African apartheid, but although some journalists did come forward admitting their wrongdoings to the post-apartheid Truth and Reconciliation Commission, Naspers only publicly apologised for its “complicity in a morally indefensible political regime” (Esmare Weideman, 2015) in 2015. The dark history of Naspers’ pressing business may be hard to forget, but this division now represents an almost negligible part in the company’s massive valuation.
After its creation, Naspers took a very aggressive expansion plan. In the early years Naspers focused on creating and buying diverse publishing companies, consequently reaching a wider audience in different languages, such as starting publishing books in Xhosa in 1922. Fast-forwarding to the ‘80s Naspers started eyeing the television industry, consequently creating Multichoice a subscription TV service that quickly spread over Africa. In the ‘90s Naspers focused on targeting the growing internet industry, launching the Internet provider M-Web and the online portal Media24. From then onwards Naspers had a considerable cash-inflow which they decided to invest in the early Chinese company Tencent. This 2001 investment has proven to be one of the greatest in the history of public markets. Naspers $32 million stake in Tencent grew to be worth $133 billion. Naspers owns close to one-third of the technology giant responsible for the widely popular WeChat. This single investment transformed Naspers from a regional powerhouse to an international one. With the money originating from small Tencent ownership trimmings, Naspers has created an incredibly valuable portfolio of internet companies. Such examples are iFood, OLX, Udemy, Codecademy, Swiggy and many others.
Ultimately Naspers became too big for the Johannesburg stock exchange, at one point representing 25% of the FTSE JSE 40 index. Representing such a big part of the market meant a lot of investors would trim down their positions for the sake of diversification. This started hurting Naspers valuation, which for many years has been trading at a lower valuation than its Tencent position alone. To try and address this valuation discount, in 2019 Naspers spun off its technology and Tencent investments into a Dutch-based subsidiary named Prosus. This new company currently holds most of Naspers technology investments, and consequently it represents the biggest consumer internet company listed in European markets.
Naspers is now an international giant, and all of its success can be traced back to the timely investment into Tencent.
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