Naspers boss ‘destroys’ R600bn
VALUE DOWN: IT IS HASTENING, SAYS SAPORTA IN LETTER
IAM&R director Albert Saporta accuses Naspers CEO Bob van Dijk of huge value wipeout since taking the helm.
Company says it would be happy to have a conversation with director if he would engage with it directly.
AIM&R director Albert Saporta accused Naspers CEO Bob van Dijk of destroying R600 billion in value since taking the helm in April 2014.
The allegations are in the second open letter he’s sent to Van Dijk, in which he responds to Van Dijk’s statements at a New York Investor Day. Van Dijk said Naspers will consider “structural options” if the value gap with its Tencent stake persists.
In response, Naspers’ Meloy Horn said: “At the recent Investor Day in New York, Naspers management covered the views on and efforts to narrow the discount extensively. It is unfortunate that, given his views, Mr Saporta did not attend the day and take advantage of the opportunity to engage with management on the matter or made any other attempts to engage with us directly.”
Naspers’ 33% stake in Chinese internet giant Tencent is valued at $158 billion, while Naspers’ market value as a whole is $112 billion, according to Bloomberg.
In Saporta’s first letter, he wrote: “Since your appointment at the helm of Naspers, the value of the Tencent stake relative to Naspers’ market capitalisation has grown from 90% to 130% today and seems to accelerate. Correspondingly, the value of Naspers’ dozens of other investments and businesses has declined from a value of R34 billion to negative R300 billion. This can be simply calculated by subtracting the value of the Tencent stake from Naspers’ market capitalisation. In other words, in the last three years, R334 billion of shareholder value has been destroyed.”
Saporta now writes that since his previous letter, Van Dijk presided over a further R300 billion value destruction – totalling R600 billion since his appointment in April 2014.
He reiterates his previous letter’s recommendations, “which, had they been implemented at the time, would have saved shareholders at the very least R300 billion, and more”.
He recommends Van Dijk’s compensation be aligned with the implicit value of Naspers’ non-listed ex-Tencent businesses; and the spin-off the Tencent stake to Naspers shareholders. • Declaring clearly what level of discount is unacceptable and buy back shares when it exceeds that level. • Selling some Tencent shares and using the proceeds for the proposed buy-back. • Considering the sale of Tencent shares by issuing a convertible bond, convertible into Tencent shares, and using the proceeds to buy back shares or for investing. • The spin-out of the entire investment portfolio to investors in a new company, with enough cash to sustain an investment strategy over the next 2-3 years.
Saporta says contrary to market reaction (which erased R100 million of value after the New York meeting), “I am encouraged by the new ‘body language’”.