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Celebrating SA success on the global stage – Naspers and Glencore

IN TODAY'S RATIONAL PERSPECTIVE, Alec Hogg looks at the global success of Koos Bekker and Ivan Glasenberg, two South African born and bred entrepreneurs whose businesses are in the news today. Naspers through another glittering set of financial results; Glencore with the assessment that its progress to surpass BHP Billiton as the world’s biggest resources group is "inevitable".

ALEC HOGG:  It’s Tuesday, the 25th of November, a good day to celebrate South African business success and two big names are in focus this morning. Starting off with Koos Bekker: his company, which he built from a small backwater South African media business into one of the major media players in the world. In fact, probably the biggest emerging market media company on earth. Naspers [JSE:NPN] today released financial results showing that the train keeps rolling. Thirty-nine percent bottom-line growth from the company, generated primarily from its investment in Tencent. That, itself, is worth revisiting. When Naspers made its investment into Tencent, it had just written off tens of millions of Dollars on a similar investment in China, an Internet Service Providing company.

However, because Bekker stuck to his guns and together with his right-hand man, the late Antonie Roux, went along to Tencent, a small company with about 30 people at the time – based in Hong Kong – an instant messaging business. They made the investment, supported them, went down from 50 percent to 30 percent in the listing of Tencent, but that listing has given the company a market value, which now… Well, the stake Naspers has in Tencent is even greater than the (R630bn) market cap of Naspers itself.

An interesting aside on this is that Tencent is in the news this morning for its own efforts into the United States. It is taking on its global rival, WhatsApp in the heartland of the U.S. and what Tencent is doing is very interesting and perhaps it’s a lesson for the rest of us looking to globalise our businesses. It’s using the expat Chinese, both students and those who work in the United States, to promote WeChat (its instant messaging operation), and to use that to attack WhatsApp in its own backyard. A fascinating development there and a big success for South African business.



Also in the news from a South African perspective, is Ivan Glasenberg through a very small deal that he’s done in Australia through his Glencore getting together with Peabody, is to try to rationalise their costs on the coal side.

But the big story that came out on Bloomberg early this morning South African time is that a leading UK banker got together in a meeting with hedge funds in London, and told them that Glasenberg’s acquisition by Glencore of Rio Tinto is inevitable. It’s only a matter of time. Glencore’s had a run at Rio Tinto already. Rio Tinto rebuffed it and now, according to regulations of the London Stock Market, it has to wait six months until it can come back again. The U.K. banker was in a secret meeting, telling hedge funds ‘it’s inevitable. It is something that will happen’. It’s almost like you can have the first step in the process by making the original bid. It was rebuffed by the Rio Tinto Board. Glasenberg will be able to come out with all guns firing in a few months’ time.

What is interesting about is that the Johannesburg-born Glasenberg will have created – should this acquisition of Rio Tinto go through – the biggest resources group in the world, and he’s done it through hard work, smart capital allocation, and through sticking to his strategy. Should the transaction be concluded at some point in the future, Glencore would exceed the size of the Australian Group, BHP Billiton. Isn’t that something to celebrate?

This has been The Rational Perspective.
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