Africa is no longer in the economic doldrums and the Dark Continent moniker is changing as consumer spending and trade open up.
With the coming and operationalization of the Africa Continental Free Trade Area (AfCFTA), the continent can only continue wallowing in poverty if the opportunities offered by the trade agreement are not tapped in good time.
For decades, moving goods around Africa has been a huge challenge and only a few companies have managed the onerous task of delivering merchandise around the 30.37 million km² landmass.
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The African continent’s supply chain, for the better part, is largely broken and local business owners to multinationals know this. Many African countries have severally ranked low on indicators such as cross-border clearance processes, quality of trade, infrastructure, inconsistent tax regimes, and consignments’ track and trace mechanisms on the World Bank’s Logistics Performance Index.
This reality means that the sector lags behind making it hard for businesses to grow and even if they grow, the pace is far slower than on other continents.
But, despite these challenges, there are companies that have kept shining and have become some of the largest on the continent.
The South African multinational Naspers, is one whose growth has made it one of the largest companies in Africa by market capitalization. In 2021, its outstanding shares had a market value of over US$ 104 billion.
Naspers Limited is a multinational holding company headquartered in Cape Town whose interests are in online retail, publishing, and venture capital investing in the consumer internet sector.
The company owns a 56.92 per cent stake in Prosus and also wholly owns Africa’s largest publishing company Media24, South Africa’s largest online retailer Takealot.com and Naspers Foundry, a South African focused venture capital fund.
Prosus is a global consumer internet group and one of the largest technology investors in the world.
Operating and investing globally in markets with long-term growth potential, Prosus builds leading consumer internet companies that empower people and enrich communities.
The group is focused on building meaningful businesses in the online classifieds, food delivery, payments and fintech, and education technology sectors in markets including India, Russia, and Brazil.
Through its ventures team, Prosus invests in areas including health, logistics, blockchain, and social commerce. Prosus actively seeks new opportunities to partner with exceptional entrepreneurs who are using technology to improve people’s everyday lives.
Every day, millions of people use the products and services of companies that Prosus has invested in, acquired, or built, including 99minutos, Avito, Brainly, BUX, BYJU’S, Bykea, Codecademy, DappRadar, DeHaat, dott, ElasticRun, eMAG, Eruditus, Flink, GoodHabitz, Honor, iFood, Klar, LazyPay, letgo, Meesho, Movile, Oda, OLX, PayU, Quick Ride, Red Dot Payment, Remitly, Republic, Shipper, SimilarWeb, Skillsoft, SoloLearn, Swiggy, Udemy, Urban Company, and Wolt.
Hundreds of millions of people have made the platforms of Prosus’s associates a part of their daily lives.
Today, Prosus companies and associates help improve the lives of more than 2 billion users globally.
The company had investments in Tencent, Mail.ru, Ctrip.com International and DeliveryHero. It also has a primary listing on Euronext Amsterdam and a secondary listing on the Johannesburg Stock Exchange.
On August 31, 2021, Prosus announced an update to its share repurchase programme of Prosus ordinary shares N (the Share Repurchase) announced on 23 August 2021.
As part of the Share Repurchase, for the period between 23 August 2021 and 27 August 2021, Prosus repurchased 4,152,396 Prosus ordinary shares N at an average price of €70.5233 per share for a total consideration of €292 840 640.84 (US$343 337 682.88).
Naspers, which is the holding company, was founded on May 12, 1915.
Following the Covid-19 pandemic outbreak in December 2019,
The group recovered well from a tough first quarter of 2020 to accelerate revenue growth, improve profitability and cash-flow generation.
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Strong performance in uncertain times:
- Group revenue grew 32 per cent to US$13.0bn (HY20: US$10.2bn), with strong growth across food delivery, retail, and education.
- Prosus revenues grew 32 per cent to US$12.7bn (HY20: US$9.9bn)
- 141 per cent revenue growth of food delivery
- 69 per cent revenue growth in retail
- 54 per cent revenue growth in Edtech
- Group trading profit increased by 42 per cent to US$2.6bn (HY20: US$1.9bn).
- Core headline earnings were US$1.6bn (HY20: US$1.7bn) driven by improved profitability from our e-commerce units and the growing contribution from Tencent. The year-on-year 5 per cent decrease reflects that Naspers owns 72.66 per cent of Prosus in the current financial year and owned 100 per cent in the prior year.
- Free cash flow jumped from US$19m to US$292m driven by lower food losses, strong working capital management, and a US$81m increase in Tencent dividend.
Bob van Dijk, Group Chief Executive Officer, commented:
“Our strong performance reflects the resilience and adaptability of the group and of our teams to effectively navigate challenging times. We entered the pandemic with financial strength and good momentum and in the second half of the period, our businesses recovered well from the initial impact of Covid-19 and are now fundamentally stronger than they were going into the pandemic. The pandemic has accelerated activity in the consumer internet space, benefitting our businesses. We have seen particularly strong growth in food delivery, online payments, retail, and edtech and, throughout the period, we continued to invest for long-term growth. Looking ahead, we will continue to look after our people and support the communities we serve through uncertain times and we are focused on emerging well from the pandemic.”
Several companies had to stand out performances:
- iFood grew revenues by 234 per cent YoY with KPIs including order frequency and order value hitting record levels.
- PayU GPO grew revenues 48 per cent as people used cashless payment methods.
- Udemy grew enrolments by more than 400 per cent.
- BYJU’S saw 180 per cent growth in students on top of already high growth rates.
Disciplined investment for long-term growth:
- Invested ~US$600m to strengthen our businesses.
- Merged letgo and OfferUp in the US and led a US$120m investment round for a 35 per cent fully diluted stake in the combined business which is well-positioned for growth with national reach.
- Injected our MENA classifieds assets into EMPG (Emerging Markets Property Group) for a 39 per cent fully diluted stake and participated in a US$150m financing round valuing the business at over US$1bn.
- Post the end of the period, OLX Brazil closed the US$520m acquisition of leading real-estate vertical Grupo Zap, announced in March 2020.
- Payments and fintech
- An additional investment of US$53m in Remitly.
- Stepped up our total investment to more than US$1bn and seven companies in this fast-growing sector.
Strong balance sheet:
- Net cash position of US$4.6bn.
- Undrawn US$2.5bn revolving credit facility.
- In July, Prosus successfully raised more than US$2bn in debt, comprising its longest-dated US dollar offering to date and its debut euro notes offering.
Basil Sgourdos, Group Chief Financial Officer, said the group delivered strong results, with group revenues growing 32 per cent to US$13bn, trading profit growing 42 per cent to US$2.6bn, and core headline earnings of US$1.6bn.
Despite a tough first quarter, a strong recovery in the second quarter resulted in e-commerce revenue growth of 52 per cent for the reporting period compared to the same period last year. Notably, food delivery nearly doubled revenue growth while trading losses improved by US$91m.
“We remained disciplined on capital allocation and ended the period with a strong balance sheet, giving us financial flexibility as we move forwards. Given our strong cash position, the full market valuations in consumer internet M&A and a widening of our consolidated discount to net-asset-value, after the end of the period we announced a substantial US$5bn buyback of our own stock to invest in our strong portfolio and return value to shareholders. We remain fully focused on value creation through delivering continued long-term growth and by reducing the discount,” he added.
The current operating environment remains uncertain and the longer-term social and economic impact of Covid-19 is unclear. The group is on a solid financial footing and the fundamentals of the underlying businesses are strong, with all well-positioned to build on the accelerating shift to online triggered by the pandemic.
Management remains focused on value creation for shareholders through driving profitability and cash generation in the group’s more established e-commerce businesses while investing for growth in food delivery, classifieds transactions, credit, and edtech.
In recent months, the group’s consolidated discount to net asset-value has widened and management is committed to addressing the structural issues causing this.