It is not news that one company in South Africa has market valuation that is bigger than the whole stock markets in sub-Saharan Africa excluding South Africa (you expect that). The company’s market cap is at least 4x the size of the Nigerian Stock Exchange (I write this with pains). That company is Naspers – Africa’s largest entity by market capitalization.
Few weeks ago, it sold 2% of its stake in Chinese tech giant Tencent for $9.8 billion. It has invested $32 million in 2001. That $32 million was worth $175 billion (yes with B) before the 2% exit.
South African internet and entertainment group Naspers on Friday raised $9.8 billion (7.8 billion euros) selling two percent of its hugely-profitable stake in Chinese technology giant Tencent.
Naspers’ investment in Tencent has been “one of the greatest venture-capital investments ever”, according to Bloomberg News.
It said the stake in Tencent that Naspers bought for $32 million in 2001 was valued at $175 billion on Thursday.
Naspers, Tencent’s biggest investor, vowed to not sell any more shares for three years.
“These funds will be utilized to reinforce Naspers’ balance sheet and invested over time in Naspers’ development businesses,” the Cape Town-based company said in a statement.
Shenzhen-based Tencent has risen rapidly as China embraced the internet, with the company’s fortunes boosted by its WeChat social media platform.
WeChat crossed the one-billion users mark after the Chinese New Year in February.
In these two pieces (here and here), I have made a case why Nigeria needs to fix our venture capital ecosystem.
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To create such enablers in Nigeria, I propose the following specifically for the VC sector:
- Government should offer new VC (venture capital) firms in Nigeria a ten year tax incentive on profits if they have asset base of at least $50 million and will deploy the capital in Nigerian startups within 10 years.
- Offer new VC firms in Nigeria the opportunity to repatriate 100% of profit within ten years. That will help the country to attract foreign investors to make Nigeria home.
If we have this type of incentive, we will see many VC funds making Nigeria home to explore opportunities in Nigeria and continental Africa. That influx of capital will have many multiples of benefits to our economy, our people, and the Nigerian technology space. Most especially our tech firms will stay home.
As Naspers shifts its massive profit home to South Africa, there is no way the South African treasury will not get at least $30 billion if you have around 20% tax rate. That is a national budget for Nigeria if this had happened in our country. We need to pay more attention to venture funding to stimulate our economy.
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