MEDIA powerhouse Naspers yesterday announced plans to raise a R5,4bn ($750m) war chest for future overseas expansion, raising speculation that it may be on the verge of signing a major deal, writes Rob Rose in Businessday
The cash injection ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Â along with its existing cash resources of about R2,6bn ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Â will give Naspers extra firepower as it sets about emulating the overseas expansion of companies such as SABMiller and Old Mutual, which could soon see it become the dominant media group in emerging markets.
Naspers chief financial officer Steve Pacak gave nothing away yesterday, saying only that his company had a couple of deals ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œin the pipelineÃƒÂ¢Ã¢â€šÂ¬Ã‚Â.
But this follows a year in which Naspers, headed by Koos Bekker, paid $422m for 30% of Latin AmericaÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s largest media house, the Abril Group; another $165m to buy Russian internet portal Mail.ru; and nearly R4,2bn to buy 38% of M-Net from rival Johnnic Communications.
It also has a fledgling internet operation in India, and owns 36% of Chinese internet company Tencent, which is the largest Chinese internet portal.
Naspers will place the new shares privately with institutions in the next week, and Pacak said there had been much interest in Naspers generally from European and US investors looking for higher rates of growth than they could get in their home markets.
Local investors appeared unconvinced by the need to issue extra shares ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Â which will be equal to about 9% of Naspers total stock in issue. Amid a general blood-letting on the JSE where the all share index lost 3,2%, Naspers shares slid 3,4% as the company shed R2bn in market value.
Pacak said the ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œbulkÃƒÂ¢Ã¢â€šÂ¬Ã‚Â of the $750m would be used ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œfor offshore developmentÃƒÂ¢Ã¢â€šÂ¬Ã‚Â and acquisitions. He said ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œsome of these deals will happen, but most wonÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢t happen ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â¦ (but) you canÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢t predict exactly when a deal will get doneÃƒÂ¢Ã¢â€šÂ¬Ã‚Â.
ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œYou canÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢t go to the market every time you want to do a deal in order to raise capital. So our aim is to (raise enough cash) to allow us to be flexible, and to go (to the market for money) as less often as possible,ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â he said.
Coronation Fund Managers portfolio manager Gavin Joubert said that, ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œgiven their net cash position, I expect there may be some sizeable deal or deals in the offingÃƒÂ¢Ã¢â€šÂ¬Ã‚Â.
This was especially so as Naspers was raking in cash at the moment, collecting the proceeds of its offer to sell MultiChoice shares to 120000 individuals. ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œThis makes the news surprising, as Naspers has a net cash position, so we would expect it to be (borrowing money), rather than issuing equity,ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â Joubert said.
Naspers said it was ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œpursuing several (investments), some of which may be material, although no binding agreements have been entered into at this stageÃƒÂ¢Ã¢â€šÂ¬Ã‚Â.
But Joubert said Naspers had made some ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œspectacular dealsÃƒÂ¢Ã¢â€šÂ¬Ã‚Â and had been adept at highlighting media trends. ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œWithin the media area, Naspers could be a dominant player in emerging market countries within a few years,ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â he said.
The company also disclosed that it had signed up 100000 pay-television subscribers for MultiChoice in the three months to December. This suggests serious growth, considering that during the six months to September it signed up an equal number of subscribers, but in double the time.
Click here to read the full report, posted on businessday.co.za