Naspers is working to reduce its exposure to the JSE as Africa’s largest company seeks to narrow its valuation gap with flagship asset Tencent Holdings.

The media and internet company owns about 31% of Chinese technology giant Tencent, yet the market values the stake at about $25bn more than Naspers as a whole. Reducing the deficit has long been a priority for executives as they scour the globe for new online investment opportunities and work to turn more of its businesses profitable.

"The problem is we are too large for the JSE," chair Koos Bekker said at Friday’s AGM in Cape Town. Naspers is almost four times the size of the second-largest SA-based firm on the FTSE/JSE Africa All-Share Index, meaning some money managers are forced to sell the company to keep their funds’ exposure below a minimum threshold, he said.

Naspers CEO Bob Van Dijk is working on how to reduce the company’s exposure to the JSE, and said last month that he’s looking at spinning off various parts of the company into different listings outside SA. Bekker added on Friday that the process would have to be handled cautiously, as online businesses need scale to be able to grow. Naspers won’t end up being "10 little units," he said.

Spending spree

Naspers transformed from an Africa-focused media and television provider through the investment in Tencent, in which it put $32m 17 years ago. The company has since added a string of early-stage technology companies around the world, including Russia’s Mail.Ru Group, Indian travel agency MakeMyTrip, and Brazilian price-comparison site

About $700m has been spent on deals this year as the firm continues its acquisition spree, CFO Basil Sgourdous said later at the AGM. Notable exits include India’s Flipkart, which generated about $1.6bn in profit as part of a deal with Walmart.

Naspers shares rose almost 2% to R3,508.99 as of 1.06pm, valuing the company at R1.54-trillion. The stock has gained 1.4% this year, including the biggest plunge in a decade earlier this month when Tencent posted earnings that missed analyst estimates.

Van Dijk was paid about $2.5m for the year up to the end of March, not including $9.6m worth of longer-term incentives, according to the 2018 annual report. The pay is based on that of other global technology giants and much of the incentives are in shares, said Craig Enenstein, head of the company’s remuneration committee.