Pro­sus on the march to food de­liv­ery dom­i­nance

Business Day - - FRONT PAGE - Mudiwa Gavaza Tech­nol­ogy Writer gavazam@busi­nesslive.co.za

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.

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