Tak­ing a pos­i­tive step

A2X list­ing wel­comed but mar­ket still awaits more de­tail on how the tech gi­ant plans to re­duce its val­u­a­tion dis­count

Financial Mail - - PATTERN RECOGNITION - Nick Hed­ley hed­[email protected]

It’s not quite the big struc­tural remedy that many in­vestors are hop­ing for, but it’s still good news that

Naspers shares will find a sec­ond home on SA’S al­ter­na­tive stock ex­change, A2X Mar­kets, be­fore the end of 2018. The in­ter­net be­he­moth said on Tues­day that its shares would start trad­ing on A2X on De­cem­ber 27. The com­pany will keep its pri­mary list­ing on the JSE. An­a­lysts (and Naspers) say this move will do lit­tle to drive down the group’s hefty val­u­a­tion dis­count rel­a­tive to Ten­cent.

But it could im­prove liq­uid­ity and, over­all, it’s a win for SA’S cap­i­tal mar­kets.

A2X CEO Kevin Brady says his ex­change has now reached “crit­i­cal mass” as 15 com­pa­nies, in­clud­ing some heavy­weights, have listed.

Suc­cess­fully court­ing Stan­dard Bank and then Naspers — Africa’s largest pub­lic com­pany, with a mar­ket cap­i­tal­i­sa­tion of R1.3-tril­lion — is a big deal for A2X.

For the time be­ing, says Brady, for­eign in­vestors are still “more re­cep­tive” to sec­ondary ex­changes be­cause they’re fa­mil­iar with the con­cept.

Naspers CEO Bob van Dijk says A2X and other sim­i­lar peers are us­ing tech­nol­ogy to re­duce trad­ing costs and lift mar­ket trans­parency. ★★★/5

“As one of the world’s lead­ing tech­nol­ogy in­vestors we un­der­stand the value of tech­nol­ogy and are pleased to sup­port these ef­forts by also list­ing on A2X … we be­lieve our share­hold­ers will ap­pre­ci­ate the added choice of trad­ing venues,” Van Dijk says.

And there’s noth­ing to lose.

Naspers won’t have to fork out any cash for its sec­ondary list­ing and there’s no ad­di­tional reg­u­la­tory com­pli­ance re­quired.

How­ever, the mar­ket is still wait­ing for more de­tails about the larger “struc­tural op­tions” Naspers is work­ing on to re­duce its val­u­a­tion dis­count.

Some have pressed the group to seek a sec­ondary list­ing abroad, while oth­ers want it to un­bun­dle its main as­set, Ten­cent.

One struc­tural mea­sure in the pipe­line is the un­bundling of Mul­ti­choice Group, the pay-tv op­er­a­tor that funded Naspers’s Ten­cent in­vest­ment and its newer e-com­merce ven­tures. That should hap­pen in the first half of 2019.

A Naspers spokesper­son says the sec­ondary list­ing on A2X is just an­other “share­holder-friendly step that we have taken which is likely to be viewed pos­i­tively”.

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