Naspers expands in US as Fed mulls rate rise

Johannesburg - Naspers [JSE:NPN] plans to increase its exposure to US technology startups as Africa’s biggest company by market value seeks to limit the impact of a US interest rate rise and identify new internet growth prospects, Chief Executive Officer Bob van Dijk said.

The company invested $100m in September in Letgo, a US mobile-only classifieds-ads application, and plans further spending on companies based around San Francisco, the CEO said in an interview on November 28. Naspers could base “a number of investment professionals” in the Bay Area to identify the right deals, he said.

“We will probably have more focus on the Bay Area than we’ve had previously,” Van Dijk said. “If we see the right opportunities we could see ourselves put a good amount of capital there.”

A greater focus on the US would represent a new direction for Cape Town-based Naspers, which has operations in more than 130 countries and has historically targeted emerging markets including China, India and Russia. The company owns sub-Saharan Africa’s biggest pay-TV provider, while its biggest investment is a 34% stake in Chinese internet business Tencent Holdings, valued at about $64bn.

Fed move

Naspers is braced for the US Federal Reserve to announce an interest rate rise, which would probably lead to the strengthening of the dollar and subsequent pressure on currencies in emerging markets where Naspers operates, Van Dijk said. The company has currency-hedging in place to help limit the blow, he said.

“There might be some pressure on the revenues in some markets if we translate it back into dollars,” Van Dijk said. The company is “relatively well” hedged against such an event, and “generally very well diversified in different currencies around the world,” he said.

Emerging markets have been rattled this year as speculation mounts that the Fed will raise interest rates for the first time in almost a decade, possibly as early as December. African currencies have been among the worst hit, with the slide in sentiment being worsened by the downturn in China and a slump in commodity prices from oil to copper.

Naspers said on Friday that first-half sales had been hurt by weakening currencies. Revenue gained 5% to $5.9bn in the six months through September, yet advanced 20% when the effects of foreign exchange and acquisitions were excluded. The shares have gained 42% this year, valuing the company at R906bn ($63bn).

* Fin24 is part of Media24, a subsidiary of Naspers.