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Corporation
COMPUTER HARDWARE & SERVICES | IT Services
naspers.com

Investments

68

Portfolio Exits

32

Funds

1

Partners & Customers

3

About Naspers

Naspers (JSE: NPN) is a global consumer internet group. The company offers a range of internet services and products that are used by customers worldwide. It primarily sells to the technology sector, with a focus on online classifieds, payments and financial technology, food delivery, and education technology. It was founded in 1915 and is based in Cape Town, South Africa.

Headquarters Location

40 Heerengracht Street

Cape Town, 8001,

South Africa

+ 27(0)21 406 2121

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Latest Naspers News

Why Sanlam has turned bearish on MultiChoice

Feb 20, 2024

Why Sanlam has turned bearish on MultiChoice Why Sanlam has turned bearish on MultiChoice On a risk-adjusted basis, there are more compelling stocks to buy in the relatively cheap South African market. Since it was unbundled from Naspers and listed separately in 2019, pay-television operator MultiChoice Group has remained in the news – the latest development being its rejection of a R30-billion buyout offer by French entertainment giant Canal+. While five years ago we saw potential upside in MultiChoice, the landscape has changed substantially. After the recent price jump following the Canal+ offer, MultiChoice shares are, in our view, now trading at close to fair value and we’ve consequently exited the stock in most of our client portfolios. On 27 February 2019, the MultiChoice Group was listed as a separate entity on the JSE after being unbundled to shareholders as part of a wider Naspers strategy to unlock the discount in the latter’s share price. At the time, Naspers shareholders each received one MultiChoice share for every one Naspers share owned. Five years ago, MultiChoice had sizeable ‘moats’, or key competitive advantages over potential rivals Since then, MultiChoice has faced several challenges impacting the investment case for the group, not least of which were huge fines in some of the African countries in which it operates, regulatory changes, a ratings downgrade, existential competitive threats from global streaming services such as Netflix and Amazon Prime Video, and now a potential buyout. It seems investors are constantly having to make sense of a never-ending stream of new information relating to the broadcaster. Amid these challenges, the MultiChoice share price hasn’t exactly shot the lights out since its listing – it has underperformed the All Share Index on a total return basis. Five years ago, MultiChoice had sizeable “moats” – or key competitive advantages over potential rivals – the strongest being the quality of its content, including a leading local offering and sports broadcasting rights. However, it is starting to lose these advantages. DStv, MultiChoice’s direct broadcast satellite television service that operates in 54 countries across sub-Saharan Africa, enjoys a majority market share mainly due to its sports broadcasting rights, which are key to subscriber retention. Over the long run, however, other players are likely to start giving the group a run for its money in this area. Afcon drama A case in point is the recent drama around the rights to the Africa Cup of Nations (Afcon) football tournament, which MultiChoice has broadcast since 1992. In January, the group declared its SuperSport service had secured the broadcast rights to the event – a week after it had announced it would not be airing it this year after failing to secure a sublicensing agreement. Other competitive advantages once held by MultiChoice have started to unravel more aggressively. For example, with data costs having substantially declined over the past decade, the cost of switching to competitor products is now far lower. And the rival offerings are alluring – affordable mobile-only plans from Netflix and others have made it much more difficult for MultiChoice to retain subscribers. Moreover, sole distributor agreements seem to be slowly falling by the wayside. For instance, HBO is no longer granting exclusivity to MultiChoice and is now also using Netflix to distribute its popular shows. In South Africa, global streaming services Netflix, Disney+ and Amazon Prime Video seem to have been the most aggressive from a pricing perspective, given the wide range of content on their platforms. They have also been catching up in local content, which has in the past differentiated MultiChoice. DStv still offers excellent local content, and MultiChoice has its own streaming service in Showmax, which should go a long way in defending market share. However, the price that MultiChoice can charge is limited by the competition. Put differently, if there is a mass migration from DStv to Showmax, this will likely come at lower margins than MultiChoice is used to. While the migration from linear broadcast pay-TV offerings such as DStv to streaming services is ongoing, and the pay-TV market in South Africa has been in structural decline for some time now, the two mediums could conceivably coexist over the long term. They are not mutually exclusive. Pay TV on the continent still has some runway, which is likely what has attracted the Canal+ offer – and there are definite scale benefits to combining the MultiChoice subscriber base with that of the leading operator of pay TV in French-speaking Africa. In fact, Canal+ has been buying up shares in MultiChoice since 2020. Whether or not the deal goes ahead in the long run, DStv will likely struggle to defend its profit pool or grow it in real terms. In South Africa, besides the high fixed costs of the business impacting profitability and the migration to streaming services, constant load shedding has also led to subscriber losses, particularly in the midrange customer segments. The slow evaporation of the moat impacts the price-earnings ratio one can justifiably pay for the shares Further afield, the tough Africa macroenvironment in which MultiChoice operates has created a potential share price overhang impacting the long-term investment case for the group. In Nigeria, which accounts for nearly half of MultiChoice’s non-South African revenue, the group has fallen foul of the authorities more than once, racking up huge fines in the process. Just this month MultiChoice announced that it had reached a settlement with the Nigerian federal government and agreed to pay taxes of around US$37.3-million (R700-million) – after in 2022 the group was served with a $1.27-billion tax claim for its Nigerian operations and a $342-million VAT claim. In general, MultiChoice has seen large losses from its African operations over the years. While management has done a reasonable job in getting these businesses to breakeven, forex volatility and the cost of expatriating funds are likely to impact profitability over the long run. The slow evaporation of the MultiChoice moat impacts the price-earnings ratio one can justifiably pay for the shares. While its South African operations are cash generative, this business is now mature and there is not much prospect of earnings growth over the short term. Africa outside South Africa is a poor-quality earnings stream. Showmax may eventually deliver a fair margin, but it comes with potential execution risks. On a risk-adjusted basis, with only modest upside left in MultiChoice, Sanlam Private Wealth has sold the share from most of our clients’ portfolios. We’ve taken a fresh look at the group’s prospects, and it’s not a business we would like to own over the long term. We decided to wait for the long-expected buyout offer before exiting at a price close to our own fair value. In our view, on a risk-adjusted basis, there are more compelling stocks to buy into in our relatively cheap South African market. The author, Dumisani Chiume, is an investment analyst at Sanlam Private Wealth

Naspers Investments

68 Investments

Naspers has made 68 investments. Their latest investment was in Planet42 as part of their Series B on February 22, 2023.

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Naspers Investments Activity

investments chart

Date

Round

Company

Amount

New?

Co-Investors

Sources

2/22/2023

Series B

Planet42

$15M

No

ARS Holdings, Rivonia Road Capital, and Undisclosed Investors

4

9/26/2022

Series D

SweepSouth

$11M

No

7

5/31/2022

Series A

LifeCheq

$3.3M

Yes

1

5/17/2022

Seed VC

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$99M

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10

2/23/2022

Seed - II

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$99M

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10

Date

2/22/2023

9/26/2022

5/31/2022

5/17/2022

2/23/2022

Round

Series B

Series D

Series A

Seed VC

Seed - II

Company

Planet42

SweepSouth

LifeCheq

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Amount

$15M

$11M

$3.3M

$99M

$99M

New?

No

No

Yes

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Co-Investors

ARS Holdings, Rivonia Road Capital, and Undisclosed Investors

Sources

4

7

1

10

10

Naspers Portfolio Exits

32 Portfolio Exits

Naspers has 32 portfolio exits. Their latest portfolio exit was ZestMoney on January 17, 2024.

Date

Exit

Companies

Valuation
Valuations are submitted by companies, mined from state filings or news, provided by VentureSource, or based on a comparables valuation model.

Acquirer

Sources

1/17/2024

Asset Sale

$99M

7

7/5/2023

Divestiture

$99M

1

7/21/2021

IPO

$99M

Public

10

6/16/2021

Acquired

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$99M

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10

9/9/2020

Acquired

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$99M

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10

Date

1/17/2024

7/5/2023

7/21/2021

6/16/2021

9/9/2020

Exit

Asset Sale

Divestiture

IPO

Acquired

Acquired

Companies

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Valuation

$99M

$99M

$99M

$99M

$99M

Acquirer

Public

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Sources

7

1

10

10

10

Naspers Acquisitions

27 Acquisitions

Naspers acquired 27 companies. Their latest acquisition was Markafoni on May 20, 2014.

Date

Investment Stage

Companies

Valuation
Valuations are submitted by companies, mined from state filings or news, provided by VentureSource, or based on a comparables valuation model.

Total Funding

Note

Sources

5/20/2014

Series A

$99M

$7M

Acquired

1

6/12/2012

$99M

Corporate Majority

4/22/2012

Private Equity

$99M

Corporate Majority

1

10/3/2011

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$99M

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10

7/7/2011

Series A

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$99M

$99M

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10

Date

5/20/2014

6/12/2012

4/22/2012

10/3/2011

7/7/2011

Investment Stage

Series A

Private Equity

Series A

Companies

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Valuation

$99M

$99M

$99M

$99M

$99M

Total Funding

$7M

$99M

Note

Acquired

Corporate Majority

Corporate Majority

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Sources

1

1

10

10

Naspers Fund History

1 Fund History

Naspers has 1 fund, including Naspers Foundry.

Closing Date

Fund

Fund Type

Status

Amount

Sources

3/13/2023

Naspers Foundry

2

Closing Date

3/13/2023

Fund

Naspers Foundry

Fund Type

Status

Amount

Sources

2

Naspers Partners & Customers

3 Partners and customers

Naspers has 3 strategic partners and customers. Naspers recently partnered with South African Plastics Pact on April 4, 2023.

Date

Type

Business Partner

Country

News Snippet

Sources

4/20/2023

Partner

Naspers, Takealot and Media24 join the South African Plastics Pact to reduce plastic waste across value chain

Naspers , and its subsidiary businesses , Takealot and Media24 , have joined the South African Plastics Pact , an industry collaboration of packaging producers , brand owners , retailers , recyclers , governments and NGOs to tackle plastic packaging waste by creating a circular economy for plastics .

1

5/12/2021

Partner

Switzerland

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10

8/19/2015

Partner

United Kingdom

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10

Date

4/20/2023

5/12/2021

8/19/2015

Type

Partner

Partner

Partner

Business Partner

Country

Switzerland

United Kingdom

News Snippet

Naspers, Takealot and Media24 join the South African Plastics Pact to reduce plastic waste across value chain

Naspers , and its subsidiary businesses , Takealot and Media24 , have joined the South African Plastics Pact , an industry collaboration of packaging producers , brand owners , retailers , recyclers , governments and NGOs to tackle plastic packaging waste by creating a circular economy for plastics .

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Sources

1

10

10

Naspers Team

29 Team Members

Naspers has 29 team members, including current President, Senior Vice President, M. Lee Clancy Jr.

Name

Work History

Title

Status

M. Lee Clancy Jr

President, Senior Vice President

Current

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Name

M. Lee Clancy Jr

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Work History

Title

President, Senior Vice President

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Status

Current

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