The Economist - USA (2020-09-05)

TheEconomistSeptember 5th 2020 51

1

F

ew firmsstruggle with too much suc-

cess. One is Naspers, a South African

media group founded in 1915. In a prescient

bid to diversify away from newspapers in

2001 it paid $32m for a large stake in a pid-

dly Chinese startup. Tencent, the startup in

question, has since morphed into a gaming

and messaging behemoth worth over

$670bn. Dealing with the windfall presents

unique management headaches.

The unexpected upshot of a South Afri-

can investment in China is a European con-

sumer-internet giant. A year ago Naspers

listed Prosus, a vehicle for its online bets,

in Amsterdam. By dint of owning 31% of

Tencent, worth about $208bn, as well as

other investments made since, Prosus is

the eu’s fourth-most-valuable firm. It is

also the closest that Europe has to the glo-

bal tech stars that dominate the world’s

stockmarkets. Its boss, Bob van Dijk, ac-

knowledges the firm’s model may be un-

usual in the tech world. But, he argues, it

can still deliver value.

Prosus has invested billions—and has

ever more billions to invest, thanks to Ten-

cent’s continued success—into all manner

of online ventures, from e-commerce to

food delivery, distance learning and classi-

fied ads. Though run from the Netherlands,

much of its empire lies in emerging mar-

kets, a nod to its African heritage. Deep

pockets let it build online businesses or ag-

gregate local players into global platforms.

As exciting as that sounds, Mr van Dijk

has a more prosaic problem: proving to the

outside world the firm needs to exist. He

insists Prosus has found a distinctive ap-

proach. Unlike venture capitalists, it does

not need to return money to investors. It

can back businesses for the very long term

and, because it runs some of them, has “an

operator’s dna”. Few of its investments

have been busts.

Investors are sending mixed signals. Its

market capitalisation of $167bn is about a

fifth less than the value of its Tencent

shares. Add the other firms it has stakes in,

some of which are listed, as well as $4.5bn

of net cash on its balance-sheet, and the

discount rises to 33%—a gap of $80bn or so

(see chart). Its share price has risen of late,

Prosus

Winner’s curse

PARIS

Europe has an internet giant of its own. Does it have a purpose?

Tencent’s more

Sources:DatastreamfromRefinitiv;Bloomberg; The Economist

Share prices, September 11th 2019=100

$ terms

250

200

150

100

50

2019 2020

Sep 11th Prosus listing

Trip.com

Prosus

Mail.ru

Tencent

Delivery

Hero

Prosus assets, September 2nd 2020

$bn

250

200

150

100

50

0

Market

capitalisation

Stake in Other

Tencent

Netcash

Otherlisted

investments

Unlisted

investments

(estimate)

Discount

32.5%

Business

52 WizzAir’srise

53 JapanInc’srebalancingact

53 BuffettbetsonJapan

54 Bartleby:Afterthefall

55 Indianover-Reliance

55 TikTok’slimbodance

56 Schumpeter: Tech idealism

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