Naspers to seek e-Commerce, video deals with $2.5bn funds

Naspers Ltd. plans to use the proceeds of a proposed $2.5 billion capital raising to invest in online retail and video opportunities as Africa’s biggest company pursues further growth in emerging markets.

“E-commerce is still very much an area of focus for us and I think that the majority of our investment will actually go into different e-commerce models,” Chief Executive Officer Bob Van Dijk said in a phone interview on Saturday. “We also like connected video.”

Naspers said on Friday it was considering the fundraising to “invest in attractive growth opportunities” and help pay down debt related to the increase of its stake in Avito, Russia’s largest classifieds-ads site. The Cape Town-based company has expanded through acquisitions in emerging market startups around the world, and in August started Showmax, a video-on-demand service that will be expanded to four continents by next year.

Van Dijk said he would be talking to major investors about the capital raising “in the next few days.” The company has appointed Citigroup Inc. and Morgan Stanley to advise on the transaction.

Naspers is the owner of DSTV, sub-Saharan Africa’s biggest pay-TV service, which has been struggling this year due to weaker currencies and economic growth in some markets, Van Dijk said. The company raised prices in response, prompting some customers to cancel their subscriptions, he said. Naspers also cut back on less popular content and reduced costs.

Video-entertainment sales still increased 12 percent to 22.6 billion rand ($1.6 billion) in the six months through September, while the number of television customers was little changed at 10.2 million. Adjusted net income increased 45 percent to 8.8 billion rand.

Naspers shares fell 3.7 percent to 2,143.15 rand at the market close in Johannesburg on Friday. That pared the year’s gain to 41 percent, valuing the company at 901 billion rand.

 – Bloomberg [Chris Spillane]