Prosus on the march to food delivery dominance
Naspers-controlled Prosus is considering raising its stake in Brazilian online food delivery platform iFood, as part of a broader strategy to bulk up in fast-growing e-commerce after coming up short in a takeover bid for a British company.
Prosus already owns 65% of iFood, one of Brazil’s biggest online food delivery firms, present in more than 1,000 cities and competing with Softbank’s Rappi and Silicon Valley giant UberEats. With owners of the remaining stake having said they plan to sell their holding, Prosus CFO Basil Sgourdos said the company would be interested, depending on the price.
“But again, what is the price? If [the] price is fair and reasonable, we will play. If not, we don’t need to,” Sgourdos told Business Day. “We already control the business. We effectively have 65% of the business, they have 35%. We don’t need their approvals or anything to run the business, and we’re happy to keep moving forward.”
It is not clear how much iFood is worth.
Sgourdos’s comments came after Prosus, which has made food delivery, payments and classifieds the cornerstone of its growth strategy, said it was sitting on a $4.5bn (R73bn) war chest plus untapped credit facilities worth $2.5bn that would be used in scanning the world for acquisitions to scale up investments in classifieds, payments and online food delivery.
For some investors, it is crucial for Sgourdos and CEO Bob van Dijk to land a major acquisition to help Prosus break the shackles of being seen as a proxy of Tencent, which has been growing at breakneck speed as locked-down consumers worldwide flock to its video games and social media platforms. Prosus, of which Naspers holds almost three quarters, owns about a third of Tencent.
Prosus tried and failed to beef up its food-delivery business when its direct offer of nearly R100bn to UK-based Just Eat’s shareholders was trumped by Amsterdam-based rival Takeway.com. After completing the merger, Takeaway said it would explore exiting Just Eat’s stake in iFood. “Takeaway.com bid a much higher price than we did. That’s fine. That’s a price we weren’t willing to pay,” Sgourdos said. “What’s really been a hallmark of our success and high returns is the price discipline we show. We know what we can pay to deliver a good return.
“If it goes beyond that, we have no problem walking away from the deal.”
Prosus has also been active with growing the iFood business in South America. Sgourdos said it recently consolidated iFood’s Colombia investment with Delivery Hero’s Colombia investment, “so that we are better placed to take on the lead company in that market, so we’ll see how that goes”.
The combined companies are expected to have the largest geographic presence in Colombia with more than 12,000 restaurants in more than 30 cities. Apart from acquisitions, Prosus invested about $600m to grow its food delivery business in the year to end-March.