Prosus writes off R10bn stake in Russian social media site, directors resign

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Prosus owns a 25.7% stake in VK Group, the parent company of popular Russian social media site VKontakte.
Prosus owns a 25.7% stake in VK Group, the parent company of popular Russian social media site VKontakte.
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  • Prosus says it has written down the full value of its stake in Russia's biggest internet company.
  • The group says three of its directors on VK's board have also resigned. 
  • The US Treasury has sanctioned VK's CEO, accusing him of being among Russia's 'Kremlin-connected elite'.


Prosus, a subsidiary of Naspers, will be writing down the full $700 million (roughly R10 billion) carrying value of its 25.7% stake in Russia's biggest internet company, the VK Group. 

This follows the imposition of sanctions by the US Treasury against VK's CEO, Vladimir Kiriyenko, and other "indirect shareholders".

The VK Group owns Russia's two most popular social media networking sites, VKontakte and Odnoklassniki, as well as email service Mail.ru. VKontakte, which has over 70 million monthly active users, has been Russia's most popular social media site for years. 

The Russian government has blocked access to Facebook and Twitter in recent days, leaving VKontakte as one of the only large social media platforms in the country. 

Experts told Fin24 that VKontakte, which is controlled by the Russian state-controlled energy company Gazprom, has been targeted by Kremlin-friendly forces to spread disinformation. Similar claims have been denied by VK, which says it has "never participated in politics". 

Last week, Bloomberg reported that it was one of the sites targeted by a widespread campaign to discredit Ukraine. Since 2017, the platform has been banned in Ukraine for allegedly carrying pro-Russian propaganda. 

The London Stock Exchange has also suspended trading in the VK Group, which has a secondary listing there, to "maintain orderly markets" following Russia's invasion of Ukraine. By the time trade was suspended last week, VK's stock had already plunged to below $1 a share. 

Directors resign 

In an announcement on Monday, Prosus said it had also asked its directors on VK's board to resign their positions.

VK confirmed that three directors linked to Naspers - Jaco van der Merwe, Charles Searle and Mark Remon Sorour - stepped down on 4 March. Two additional independent directors resigned on Monday, while the group's CFO also quit. 

"VK continues business as usual. The company will announce new appointments as soon as possible," said Kirienko. 

Prosus on Monday said it was "extremely concerned about the continued conflict" in Ukraine.

PODCAST | SA Money Report: The Putin crony, the Naspers money and tensions in Mother Russia

"It is in the world's interest to find a solution that provides an immediate de-escalation and secures long-term peace and stability in the region and beyond," it said. "Our primary concern is the well-being of our employees and we continue to support all of our people in the region."

Prosus has classified operations in both Ukraine and Russia that are unrelated to its stake in VK. 

Last week it said it was taking "all appropriate action" to support its 350 employees in Ukraine, who work for its European classified site OLX. It also announced it was donating $350 000 to the Ukrainian red cross. 

* Fin24 is a subsidiary of Media24, which is part of Naspers.

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