CHARITY BEGINS ELSEWHERE

Africa’s biggest internet company isn’t making the right bets on African internet companies

Packing up.
Packing up.
Image: Reuters/Akintunde Akinleye
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*Corrected to show while OLX offices will shut in Nigeria and Kenya, Naspers says operations will continue

Naspers, the Cape Town-based media and internet conglomerate, made one of the biggest and most transformative bets in its 102-year old history back in 2001. That was when it bought a 46.5% stake in Tencent, an up and coming Chinese internet company, for $34 million.

It seemed expensive at the time but today (even after reducing its stake to 33.3%) that deal was prescient given Tencent is worth over $500 billion today. It’s a model Naspers has been keen to repeat. This month, it led a $100m Series F investment in Swiggy, an Indian online food ordering and delivery platform.

Naspers, which is Africa’s most valuable company thanks to that stake, prides itself as a global company with investments spanning over 100 countries. But it appears the old adage, charity begins at home doesn’t apply when it comes to Naspers and internet deals. It has built or acquired stakes in classified platforms, e-commerce marketplaces and messaging apps all over Africa but it’s yet to record another notable success story on the continent. Instead, it’s been a bit more of the opposite of that.

The latest internet company backed by Naspers to run into troubled waters in Africa is OLX, a popular classifieds platform operational in 10 African countries. The company will shut down offices in Nigeria and Kenya next month. Naspers says the platform will now be run remotely in both countries.

The news comes days after Naspers’ stake in Konga, a six year-old Nigerian e-commerce company, was bought over as part of an acquisition by Zinox, a Nigerian technology firm. Zinox now owns 99% of Konga having also bought out Kinnevik, the Swedish investment firm. While Konga’s sale price has not been officially disclosed, industry watchers believe the widely reported $10 million tag means it’s likely Naspers and Kinnevik made a loss on their investment. Konga raised $78.5 million from various investors since being founded. It raised $40 million in its Series C round in October 2014 from Kinnevik and Naspers, according to Crunchbase data.

Nigeria has proven particularly difficult for Naspers to crack. In 2016, WeChat, Tencent’s messaging app managed in Africa by Naspers, shut down its Nigerian operations and moved to South Africa and, in 2013, it also shut down the operations of Mocality, an online directory business, in both Nigeria and Kenya. Back in 2011, Naspers shut down Kalahari, an e-commerce platform in Nigeria with its performance falling “below expectation.”

Naspers’ current big internet business hope in Africa is Takealot, South Africa’s biggest e-commerce platform. Last year, Naspers invested $74 million (pdf, page 4) for a controlling stake in the company. While it searches for its big internet hit, Naspers’ business in Africa will likely continue to be driven by DStv, its dominant and lucrative pay-TV business, which operates in over 30 countries on the continent.