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Prosus and Naspers CEO Bob van Dijk speaks on stage at TechCrunch Disrupt Berlin 2019 at Arena Berlin on December 11, 2019.
Noam Galai / Getty Images for TechCrunch
Prosus is seeking acquisitions after the e-commerce giant reported a 28% increase in first-half earnings and a net cash position of $ 4.3 billion.
The owner of global internet assets that specialize in food delivery, payments and online education lost in two high-profile acquisition battles last year and maintains a strong cash position, according to a statement Monday. The company also raised $ 2 billion in a debt sale in July that drew strong demand from investors.
“We continue to explore growth opportunities to advance our strategy,” said Prosus.
Prosus’s approach to e-commerce has proven effective during the Covid-19 pandemic, which drove demand for Internet services around the world. However, some sectors, such as online travel, were affected by a drop in holiday demand. While the long-term economic impact of the crisis is unclear, Prosus is “cautiously optimistic” about its prospects, the company said.
“We invested $ 600 million in our businesses in the first half, especially in education and online food delivery,” CEO Bob van Dijk said in an interview with Bloomberg TV. The coronavirus lockdowns caused many people to turn to online services that they will likely continue to use, he said.
At least another $ 600 million has been invested since September, CFO Basil Sgourdos said in a call with reporters.
Deals that have eluded Prosus include a battle over Just Eat, which was eventually bought by Takeaway.com, while EBay’s classifieds business was acquired by Prosus’ smaller Norwegian rival Adevinta ASA for $ 9.2 billion. .
Valuation gap
Among the challenges facing Prosus CEO Bob van Dijk is a persistent gap in valuation of the company and its crown jewel: a 31% stake in Chinese giant Tencent Holdings. Shares in the Amsterdam-listed company have gained 37% this year to give a market capitalization of 148 billion euros (176 billion dollars), but Tencent’s stake is worth about 191 billion euros.
“Our investments are generating a great return; this is the most important component for us to reduce the discount,” Van Dijk said in a press call.
This was also a problem for Naspers, the South African company that parted ways with Prosus in 2019 in part to try to cut the discount. Prosus said last month that it would buy back $ 5 billion worth of shares in itself and Naspers in a move designed to boost shareholder value and try to bridge the gap, and will begin the process on Tuesday.
Naspers also reported first-half financials on Monday, saying earnings fell due to its 73% stake in Prosus. Its shares were up 0.2% at 9:21 am in Johannesburg.
* Fin24 is part of Media24, a subsidiary of Naspers.
