Naspers plans 'significant investments' to make use of $10 bn cash pile

Naspers Ltd. has its sights set on acquisitions as Africa’s largest company by market value targets “significant investments” for its $10 billion cash pile in the next couple of months, Chief Financial Officer Basil Sgourdos said.

“In the first half of this year we have done about $750 million in deals, and there are some near-term opportunities coming up,” Sgourdos said by phone on Friday. “With markets correcting and valuations coming down, that favors companies with strong balance sheets, and that’s what Naspers has.”

Naspers is working to reduce its exposure to Johannesburg’s stock exchange as it seeks to narrow a valuation gap with flagship asset Tencent Holdings Ltd. The media and Internet company owns about 31 percent of the Chinese technology giant, yet the market values the stake at some $28 billion more than Naspers as a whole.

Reducing the deficit has long been a priority for executives as they scour the globe for investment opportunities and work to turn more of its businesses profitable.

Every year, Naspers looks at about 700 deals, and completes 10 to 15, said Sgourdos. “Those are the ones that makes sense for a Naspers,” he said.

Naspers favors investing in classifieds, online retail and payments businesses. More recently it has started to put a lot of money into food delivery, where it sees “lots of runway.” The company’s cash pile has grown this year due to the sale of shares in Tencent and India’s Flipkart.

“Our plan is to quickly and aggressively expand our reach, we are increasing our investment in the sector,” said Sgourdos. This month, the company allocated another $400 million into building its position in Brazil and broader Latin America.

Sgourdos was speaking after Naspers reported first-half earnings that missed analyst estimates. The company’s shares closed 2 percent down on the Johannesburg Stock Exchange on Friday to trade at 2,763 rand a share, valuing the company at more than 1.2 trillion rand.