Naspers Mulls $2.5 Billion Capital Raising as Profit Gains

  • Proceeds will go toward further growth opportunities, Avito
  • First-half adjusted net income rose 45% to $614 million

Naspers Ltd., Africa’s largest company by market value, is considering a capital raising of as much as $2.5 billion to fund acquisitions and pay down debt related to the increase of its stake in Avito, Russia’s largest classifieds site.

The fundraising will “enhance financial flexibility over the next few years to invest in attractive growth opportunities,” the Cape Town-based company said in a statement on Friday. Naspers appointed Citigroup and Morgan Stanley to advise on the transaction, the media group said.

Naspers, the owner of Africa’s biggest pay-TV service, has expanded through acquisitions in emerging market start-ups around the world. The company owns a 34 percent shareholding in Tencent Holdings Ltd. of Hong Kong, which at about $63 billion accounts for almost all of the South African company’s market capitalization, and has said it’s looking at more opportunities in the Internet advertising and e-commerce markets. The company said last month it would increase its stake in Avito to 68 percent.

The shares fell 3.7 percent to 2,143.15 rand at the market close in Johannesburg. That pared the year’s gain to 41 percent, valuing the company at 901 billion rand ($63 billion).

Profit Rose

Adjusted net income increased 45 percent to 8.8 billion rand in the half-year through September, the company said in the same statement. profit rose on growth in its investment in Tencent and sales of the video-entertainment business.

“Tencent’s performance was driven by improved advertising and mobile platform monetization,” Naspers said. “The digital terrestrial television business and the South African video-entertainment group continue to deliver customer growth and improved financials.”

Video-entertainment sales increased 12 percent to 22.6 billion rand as the number of television customers was little changed at 10.2 million.

“The video-entertainment segment saw more or less the same trading profit,” the company said. “In South Africa steady growth was recorded, while results in sub-Saharan Africa were impacted by weakening currencies. A number of initiatives have been implemented to deal with rising input costs.”’

Internet retail, or e-commerce, sales rose 26 percent to 15.3 billion rand, although the unit made a trading loss of 3.8 billion rand.

Before it's here, it's on the Bloomberg Terminal.