Why not knowing who controls SA’s most valuable company matters so much
Naspers is being stung by criticism. It is an unusual experience for the group, which has of late been celebrated as an internet wunderkind.
The spark for the barrage has been the relationship between Multichoice and ANN7, the television channel founded by the Guptas to counter revelations about them and their political allies in other media outlets.
Naspers has been treated with kid gloves by the rest of the media. It has an embarrassing history of collaboration with the apartheid government. While any company can reinvent itself, Naspers has persisted with an obscure controlling and ownership structure.
We have no idea who controls it, despite it being the most valuable company in SA with a market capitalisation of R1.6trillion. Seldom is this obscurantism discussed. No one wants to pick a fight with a company that buys ink by the barrel.
Naspers has two different kinds of shares in issue, A shares and N shares. The N shares are listed on the JSE, but the control lies in the A shares, which are held by obscure entities. The A shares have 1,000 times the voting rights of the N shares, but only 20% of the economic rights. Collectively the A shares have 63% of the voting rights in Naspers. The JSE-listed shares have the complementary 37% of the control. The N shares are worth R1.55-trillion; the A shares will be worth a lot more too, but the different control and economic rights make them difficult to value.
The three entities that control the company have roll-off-thetongue names Naspers Beleggings (RF) Limited, Keeromstraat 30 Beleggings (RF) Limited and Wheatfields Investments 221 Proprietary Limited.
We do know a few things about Wheatfields, because it is the company through which chairman Koos Bekker and fellow executive Cobus Stofberg hold their interests. Each has 25% of Wheatfields, according to the Naspers annual report.
Wheatfields in turn has interests in Nasbel and Keerom. We don’t know who owns the other 50% of Wheatfields, nor who owns the other shares in Nasbel and Keerom. Nasbel and Keerom between them have 50% of the voting rights so control of those two entities is key to understanding the whole group.
Even though it is a legal requirement to provide the share registers of South African companies to anyone who asks, no one has been able to obtain them for the three N share holding entities. In 2016 I wrote to Naspers CEO Bob van Dijk asking for details on the ownership of the companies and was ignored despite follow-ups. In 2014, Caxton tried to obtain details in opposing the acquisition of Paarl Media with Media24. It didn’t get anywhere, but came to the view that the group was controlled by Stofberg, Bekker and Sanlam.
Naspers does not produce a black empowerment certificate and has never undertaken a black empowerment deal. Instead it has done black economic empowerment deals at subsidiary level, including News24 and MultiChoice.
Control structures such as Naspers’s are disliked everywhere. Their objective is to vest control in the hands of a privileged group. It means buyers of the JSE-traded shares have limited say. In Naspers’s case, Nasbel and Keerom have the power between them to appoint the directors of the whole group. And we have no insight into their nature nor their motives.
Usually, differential share rights are used to invest power in a founding family or entrepreneur. The identity of who exercises control is normally plain to see. Such structures are disliked by other shareholders even then; when we have no idea who the true power is behind the structures, they should be disliked even more. The directorships of Nasbel and Keerom are publicly available and have significant cross- over with each other and with Naspers. Former Standard Bank chairman Fred Phaswana is a director of both. So is Andre Coetzee, Naspers’s group general counsel; Rachel Jafta, an economist at Stellenbosch University; Howard Turner, former CEO of construction company Group Five; and Gillian Kisbey-Green, Naspers’ company secretary. Phaswana and Jafta are also directors of Naspers.
Naspers has responded in appalling ways to the controversy over ANN7. Bekker says demands that Naspers do something about what appears to be deep corruption are “mischief”. He says it is up to the Multichoice board to sort it out, belying the most basic principles of shareholder responsibility.
But this is why the control structure of Naspers matters so much. Until we understand who controls Naspers, we can’t understand their actions.
Naspers has been dismissive of ordinary shareholders’ concerns about ANN7. One of them, Shane Watkins of All Weather Capital, which holds R1bnworth of N shares, took to Business Day to detail his frustration with Bekker’s refusal to answer questions about Multichoice.
But Bekker’s actions are logical when you realise just how little power ordinary shareholders have. And we have no idea who it actually is that Bekker does account to.