After $34 Million Investment in Tencent, Africa's Naspers Is One of World's Most Valuable

By Alexandra Wexler Features Dow Jones Newswires

Africa's most valuable company is now suddenly one of the world's most valuable companies, too.

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On Wednesday, Naspers Ltd. -- a media and internet firm little known outside South Africa and Silicon Valley -- reported a surge in half-year earnings, bolstered by its 33.3% stake in Chinese internet giant Tencent Holdings Ltd.

The performance sent shares up 0.8%, bringing its gains over the last year to 84%. That has suddenly made it the world's 65th largest listed company by market value among the Stoxx Global 3000 index. Last year, it wasn't close to breaking into the top 100, according to a Wall Street Journal analysis.

The stock market gains have been driven almost entirely by Tencent's own soaring share price. Back in 2001, Naspers paid $34 million for its current stake. Based on Tencent's current market capitalization, that is now worth about $170 billion. Investors have baked in a discount for Naspers shares, though, because of a dividend-withholding tax that would kick in should it ever sell out. Naspers market cap ended Wednesday at about $121 billion.

Apart from Tencent, Naspers holds stakes in a host of other portfolio companies, including Mail.ru Group, a Russian internet company that runs two of the country's three biggest social networks, Delivery Hero, a food delivery company in Germany, and Flipkart, India's biggest e-commerce site.

"The market is actually paying you to take on all these other great assets," said Philip Short, an analyst at Old Mutual Equities, in Cape Town.

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Naspers said net profit for the six months ended Sept. 30 rose 98% to $1.1 billion, while revenue rose 5% to $3.1 billion. That came from dividends it receives from its Tencent Holdings and profits at its e-commerce businesses, especially its global digital classified businesses.

Its holdings in Tencent also gives Naspers an almost-unrivaled position as what has become essentially a silent partnership in some of the tech world's splashiest recent investments. Earlier this year, Tencent bought a 5% stake in Tesla Inc. and a 12% stake in Snap Inc. Last year, it bought Finland's Supercell, maker of the "Clash of Clans" mobile game franchise.

Last year, Naspers opened a venture-capital outfit in Silicon Valley to be closer to the tech-innovation hub.

Recently, the company has been quietly taking on much bigger rivals.

The company launched a streaming service called ShowMax across Africa in 2015, just ahead of Netflix Inc.

Naspers is also going toe to toe with Craigslist Inc. in the U.S., with a mobile app called LetGo.

Mike Bird

in London contributed to this article

Write to Alexandra Wexler at alexandra.wexler@wsj.com

(END) Dow Jones Newswires

November 29, 2017 13:25 ET (18:25 GMT)