A hidden hand behind Naspers’ share silence

Legend has it that Naspers chief Koos Bekker will do whatever is necessary to avoid disclosing the identity of the owners of Naspers unlisted high-voting A shares. According to the same legend, this is why every time Naspers, or any of its subsidiaries such as Novus, attempts a transaction in SA, Caxton promptly ensures the competition authorities know about it. Legislation requires the shareholders of parties to a merger to be identified to ensure there is no risk of a consolidation of market power.

When PSG almost grabbed control of Naspers A shares in 2006, Bekker and fellow director Cobus Stofberg moved quickly to secure ownership. Through various deals and pooled rights, the two bought control of the A shares through a deal with Sanlam Investment Management. It’s unclear whether Bekker and Stofberg held on to the A shares or sold them on to unidentified parties.

At the time, Bekker said he was keen to ensure ownership of Naspers was not disrupted by a “mischievous small shareholder”. The issue was of concern to Naspers’ overseas business partners, he said.

At the time, Tencent was not a big factor in Naspers’ life; now it is almost everything. It is very likely the Chinese authorities would be troubled by the prospect of mischievous shareholders. More so than in any other country, in China the support of the government is critical to a company’s prospects.

That Tencent has been allowed to thrive indicates it enjoys special status. That and the severe restrictions on foreign ownership of China’s IT stocks suggests Naspers’s control profile is supported by the Chinese authorities. Any threat to it could cause disruption to Naspers’s important relationship with the Chinese government. Recall that Bekker had a reputation as the foreigner with most guanxi (connections) just a few years ago.

There may be good reason why Bekker wants a lid on the identity of the A shareholders.

DCD’s heavy engineering operations in Vereeniging and Vanderbijlpark that make large capital components for the mining industry have been closed because there have been few new capital projects in the global mining sector.

The business has struggled since mid-2013. DCD tried saving it but failed and about 200 jobs were lost. Group CEO Digby Glover says the exit will be conducted responsibly and that all commitments will be met. The light and medium engineering units are to be consolidated into DCD’s joint venture business Gravico.

This is not the first bad news from DCD’s energy and mining cluster. DCD Wind Towers, which operates from the Coega industrial development zone near Port Elizabeth, said in February that Eskom’s delays in implementing agreements had jeopardised DCD’s state-of-theart wind turbine factory.

The joint initiative between the group and the Industrial Development Corporation and the Coega Development Corporation — both state-mandated entities — is now in serious trouble. The R536m factory has been standing empty since November 2015. Cash will run out within weeks and it is likely the business will close, Glover says.

Meanwhile, DCD Marine, a 113-year-old Cape Town business in the oil and gas sectors, entered into voluntary business rescue in late 2016 after 18 months of “difficult trading”.