- In June, Dutch e-commerce investor Prosus, majority-owned by South African multinational Naspers, won approval from shareholders and regulators to liquidate its complex ownership.
- The South African Reserve Bank has given the green light to Naspers to start buying back more of its shares from Prosus.
Bob van Dijk
Bloomberg | Bloomberg | Getty Images
The immediate and mutually agreed departure of Naspers and Prosus CEO Bob van Dijk highlights a complicated few years for a company that relies on its stakes in Chinese tech giant Tencent.
In June, Dutch e-commerce investor Prosus, majority-owned by South African multinational Naspers, won approval from shareholders and regulators to dismantle its complex ownership structure.
The South African Reserve Bank has given the green light to Naspers to start buying back more of its shares from Prosus.
Prior to the current structure, Naspers (headquartered in South Africa) owned a third of Chinese internet giant Tencent Holdings. This is an investment made by the current chairman and founder of Naspers, Koos Bekker, as far back as 2001, when he paid $34 million for a 46.5% stake in the company.
Van Dijk oversaw the decision to split his stake in Tencent and other tech holdings into Prosus in 2019. In the meantime, Tencent’s market capitalization soared to nearly $1 trillion as the stock boomed during the Covid-19 pandemic. This meant Naspers accounted for almost a quarter of the Johannesburg Stock Exchange, posing a problem for some fund managers.
Then in 2021, Naspers developed a cross-shareholding using a share swap agreement. Prosus issued new shares to buy a 45.4% stake in Naspers, effectively moving a tranche of Naspers from the Johannesburg Stock Exchange to Amsterdam’s Euronext.
But this cross-shareholding offered little value to investors, with van Dijk telling Reuters at the time: “They [shareholders] said we don’t like this crossover outfit, it creates complexity. We listened to them. And we’re getting rid of it now. »
On Monday, the company also announced during a call with investors that the unwinding of the cross-shareholding had been officially completed, with the company now aiming to maintain profitability through the first half of the 2025 financial year.
Erwin Tu, Prosus Group’s chief investment officer, has been named interim CEO, with Citi saying in a research note that it sees “a good chance of him becoming permanent CEO.”
“We believe the decision was not sudden, but rather one that the company preferred to announce after the completion of the unwinding of the cross-shareholding process,” Citi analysts said.
Tu was previously managing partner of the SoftBank Vision Fund, where he also co-led M&A and corporate finance for SoftBank Group International. He was also a managing director in the technology banking group at Goldman Sachs.
During the investor call, Bekker said that although Tu only joined the company in 2021, he was now stepping up his efforts and would have the same autonomy as van Dijk, although it was not than a temporary appointment. Bekker also said the search process for a new CEO was not only focused on internal candidates, but the lengthy process would also look at external leaders.
Tu said the company would continue to “invest in a disciplined manner” and the share buyback would remain in effect as long as the discount on companies’ net asset value remained high.
Naspers shares fell 3% on Monday in South Africa following the announcement of Van Dijk’s departure, despite an initial 2% rise in early trading.
Van Dijk agreed to stay on as a consultant until September next year, but resigned from the boards of both companies. The company said the group’s strategic objectives “remain unchanged and it is on track to deliver on its commitments.”
Van Dijk’s recent compensation was criticized by shareholders who objected to how it was linked to Tencent’s growth and performance. Eighty percent of Naspers’ decision-making shareholders voted against the company’s remuneration policy. Van Dijk reportedly earned €13.5 million and €14.2 million in 2021 and 2022, with his salary reduced to €5.5 million over the last year.