Bank backs Naspers structure
Concern about Naspers’s opaque control structure may be largely unfounded, a report by JP Morgan suggests. A few analysts have said the complexity of the control structure may be contributing to the fact that the Cape Town-based company is worth less than its investment in China’s Tencent.
Concern about Naspers’s opaque control structure may be largely unfounded, a report by JP Morgan suggests.
A few have said the complexity of the control structure may be contributing to the fact that the Cape Town-based company is worth less than its investment in China’s Tencent.
Naspers’s dual-class share structure, whereby unlisted A shares have more voting rights than listed N shares, and the fact that chairman Koos Bekker is a former CEO, are frequently cited by shareholders as corporate governance concerns.
“Our research provides us with comfort around the boardlevel independence of the control structure companies. This is a positive outcome for corporate governance, in our view,” JP Morgan said in a report published in April.
The US bank is bullish about Naspers and expects the internet holding firm’s share price to hit R4,350 by the end of 2018.
Naspers shares last traded at R3,199.12 on Friday.
Naspers’s control structure entities, Naspers Beleggings (Nasbel) and Keeromstraat 30 Beleggings), are mostly independent, according to JP Morgan. The two entities own most of Naspers’s A shares, which in turn account for just more than two-thirds of the company’s voting rights.
Six of the nine Nasbel board members and three of the five Keeromstraat board members are independent of Naspers, according to the bank’s analysis.
This was “in stark contrast to the board composition in the early 2000s”, and “the companies appear to us to be independent of the Naspers board”.
In the technology sector, such control structures are relatively common and are used to shield companies from hostile takeovers. Naspers’s control structure blocked a hostile takeover attempt by PSG in 2005. However, JP Morgan said the independence of the control structure’s boards suggested a Naspers takeover was plausible.