Cape Town – Naspers Group CEO Bob van Dijk told Fin24 the company intends to stay the course of investing in entrepreneurial ventures in emerging economies, as investing in the e-commerce companies gives Naspers good returns for shareholders' money.
Naspers [JSE:NPN] announced on Wednesday that it has sold its 11.18% stake in India’s largest e-commerce marketplace Flipkart to US retail juggernaut Walmart.
Naspers made $2.2bn (R27.7bn) from the sale and its leaders have indicated that this will go a long way in bolstering its cash war chest as the company continues to venture into investments in the electronic commerce arena.
The sale of Naspers’ 11.18% stake in Flipkart represents an internal rate of return at about 32%. Van Dijk said the sale showed the company has made good investment choices which will reward shareholders in the coming years.
“What it means primarily is that we got a good return on an investment we made more than six years ago. It reflects that we have been diligent about capital allocation. We took a step back and there was an opportunity to acquire shares at a good dividend,” said Van Dijk.
He said this approach allows Naspers to secure a strong return of 32% on an annualised basis. “I think the return we got on original investment was three times capital, and we are creating a lot of value for shareholders and we are really happy about that,” he said of the Flipkart investment.
“We are trying to invest in models that get a good scale and play a role in people’s lives. Takealot grew fast in South Africa. The e-commerce models are important to consumers and sustainable,” he said.
Van Dijk said Naspers is selective in its investment, as it only pursues about 20 of the more than 600 business models it explores on an annual basis.
“There are many other things we could have invested in. The core regions we are investing in are business models that address needs. Entrepreneurial quality is a key decision maker for us and, of course, value for shareholders’ money,” he said.
Van Dijk said the company’s global team work in global economic regions including Hong Kong, Cape Town, Johannesburg, San Francisco and Singapore. He said this gives the company exposure to global ideas and innovations.
“Great entrepreneurs are found anywhere in the world, regardless of nationality. In India, Flipkart did some amazing things... Now there is a lot more cutting edge innovation coming from developing economies,” said Van Dijk.
He said he has seen entrepreneurs from China, India, South Africa and other emerging economies generate ideas which are prime examples of tech innovations. These entrepreneurs are increasingly developing ideas not found anywhere else in the world, he said.
Takealot got a mention from Van Dijk as “a clever system that works unlike any other in the world”.
In March Naspers raised R116bn in a sale of 2% in Chinese internet giant Tencent, reducing its investment in the company from 33.2% to 31.2%, with Naspers still remaining the largest investor in that company.
Naspers shares closed at R3 076.05 on the JSE on Wednesday.
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