Africa's biggest firm Naspers eyes growth in food delivery to cut value gap with Tencent

[JOHANNESBURG] Naspers Ltd is planning to invest more in businesses including food delivery to help narrow the valuation gap between Africa's biggest company and its stake in Chinese Internet giant Tencent Holdings Ltd.

The 33 per cent shareholding in the Shenzhen-based company is worth about US$166 billion, while Naspers itself is valued at US$123 billion. There's no reason for a discount at this "unusually high level," chief financial officer (CFO) Basil Sgourdos said on Wednesday.

"We are working hard to scale our other businesses to reverse this," the CFO said. "We have strikingly accelerated our growth, profitability and scale, especially in our e-commerce businesses."

Naspers sees food delivery as a particularly good opportunity, and is seeking more deals in the industry after the 660 million euro (S$1.1 billion) purchase of shares in Germany's Delivery Hero AG in September, Mr Sgourdos said. That business sits alongside iFood in Brazil, Swiggy of India and Mr Delivery in South Africa in the company's portfolio. Other e-commerce investments include online travel agents in India and education software providers in the US.

"We have seen some fantastic returns when it comes to our investments in food businesses," the CFO said.

"Recently we have invested substantially in food delivery. We really do like the segment and we believe there is a fundamental growth opportunity."

The CFO was speaking after Naspers reported a 65 per cent increase in first-half adjusted net income to US$3.50 per share. That compared with 31 per cent growth the previous year, and was about in the middle of a range forecast by the Cape Town-based company on Nov 17. Tencent earlier this month posted third-quarter net income that beat estimates.

Naspers shares rose 1.5 per cent to 3,834.97 rand at the close in Johannesburg, extending the year's gains to 91 per cent. It's the year's best performer on the FTSE/JSE Africa Top40 Index. The company should buy back its own shares to take advantage of the discount to Tencent, veteran emerging markets investor Mark Mobius said last month.

Naspers is also Africa's largest pay-TV provider, and increased subscriber numbers by 11 per cent to 12.2 million people in the six-month period.

BLOOMBERG