Amsterdam-based technology investor Prosus NV has announced plans to acquire up to 45.4 percent of shares in its parent Naspers of South Africa by issuing new Prosus shares in a deal aimed at moving part of the value of their massive stake in Tencent to Europe from Africa.
Naspers, which has a controlling stake in Prosus and would retain control, hopes the deal will improve valuations for both companies.

Read also:Top African Investor Naspers Foundry Looks To Increase Its Investment In Edutech Startups In 2021

Both trade at a discount to the value of the massive 28.9 percent stake that Prosus holds in Chinese software and gaming giant Tencent Holdings, worth 172 billion euros ($208.6 billion) at current market prices.

“The share offer we have announced today will extend Prosus’s standing as Europe’s largest internet company,” said Bob van Dijk, CEO of both companies, in a statement.

He stated that Prosus shareholders would benefit because the Naspers N shares that Prosus will purchase trade at a greater discount to the value of the Tencent stake than Prosus shares do. Naspers shares have recently traded at a discount of around 25% to Tencent stake value, while Prosus trades at a 15% discount.

According to the companies, Naspers shareholders’ share prices should trade more in line with the value of Tencent’s stake, and Naspers will continue to be the largest company on the Johannesburg stock exchange.

He stated that Prosus shareholders would benefit because the Naspers N shares that Prosus will buy trade at a higher discount to the value of the Tencent stake than Prosus shares do. Naspers shares have recently traded at a 25% discount to Tencent stake value, while Prosus trades at a 15% discount.

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According to the companies, Naspers shareholders’ share prices will trade more in line with Tencent’s stake value, and Naspers will remain the largest company on the Johannesburg stock exchange.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

Good news for South African startups. Naspers Foundry’s R1.4 billion ($100 million) VC fund is accepting pitches, after making its first investment in online cleaning services company SweepSouth.

“We’ll be investing in businesses here in South Africa that have an impact in South Africa. We look for these opportunities all around the country, to the extent that they have South African founders or have a marketplace in South Africa,” Mahanyele-Dabengwa, Naspers Foundry’s new leader who joined Naspers in July as a CEO reporting to Group CEO of Naspers, Bob van Dijk said in an interview.

Here Is All You Need To Know

• Under the new round of financing, Naspers Foundry will back companies that align with the internet businesses on which Naspers focuses — such as food, payments or classifieds — and any other digital venture that addresses a societal need.
• On financing size, the Foundry will make equity investments in various amounts, primarily from Series A up to Series B, according to Mahanyele-Dabengwa.
• However, pre-series funding won’t be on the table, for now, but could be at some point. 

“We’ve been talking to our stakeholders…and there really is a need [in the region] for much more earlier stage [investment]. So we are giving thought to that,” she said.

• For its VC allocation, Naspers Foundry will make investments over a three-year period. 
• The Foundry is part of a 1.4 billion rand ($314 million) overall commitment by Naspers to support South Africa’s tech sector.
• The $100 million fund Mahanyele-Dabengwa leads could help South Africa surge in Africa’s increasingly competitive tech landscape.
• The country was previously an unquestioned leader and outlier on the continent for its tech scene and VC investment. But over the last decade, South Africa has been rivalled by Kenya and Nigeria on venture capital and startup formation.

Read also: Why More South African Startups Have Raised Funds This Year

Anything For Other Non-South African Startups?  

Although Naspers Foundry will not back startups outside South Africa, Mahanyele-Dabengwa however noted that its parent — Naspers — can finance ventures anywhere on the continent, if it sees the right opportunity.

[However] Founders from other parts of Africa with startup operations in South Africa can be considered for funding, she clarified.

The South African media group has invested less (and been less successful) in Africa, in contrast to its robust global activities.

One of Naspers’ early Africa investments, Nigerian e-commerce startup Konga, was sold in a distressed acquisition in 2018.

The company recently added around $70 million to its commitment to South African e-commerce site Takealot and made one of the largest acquisitions in Africa this September, buying South Africa’s Webuycars for $94 million.

How South African Startups May Pitch For The Fund 

• Naspers Foundry is already engaged in outreach screening activity, but does have a rolling application call on its website open to any startup that meets specific criteria.
• Heading up review of online investment applications is Minette Havemann, Naspers Foundry’s strategy director.
• On her role in recruiting and determining startup investments, Mahanyele-Dabengwa points to her market experience.
• She comes to head Naspers Foundry after several finance capital positions, including founding and running Sigma Capital Group, a Johannesburg-based private equity fund. Prior to that, Mahanyele-Dabengwa was CEO of Shanduka Group, an investment holding company formed by South Africa’s current president, Cyril Ramaphosa.
• She has experience in the U.S. and U.K., having obtained academic degrees in both countries.
• There’s also some precedent in her new role, as Mahanyele-Dabengwa is the first female and first black chief executive in Naspers’ 104-year history.

A Look At Naspers

• Naspers is on the top 100 largest global companies list — 85th by its $108 billion market cap, just after Nike — and is one the world’s largest tech investors.
• Aside from operating notable internet, video and entertainment platforms, Naspers has made significant investments in Europe, India, Asia and South America.
• Naspers was also an early investor in Chinese tech group Tencent, selling $10 billion in shares this year after a $32 million investment in 2001.
• The company recently carved out a new holding company, called Prosus NV, to relist a portion of its assets on Amsterdam’s Euronext stock exchange.
• In Africa’s tech ecosystem — which only recently surpassed $1 billion annually in VC funding — Naspers Foundry’s $100 million could shift the startup financing lead back toward South Africa.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world