Naspers buys Dubai based online retailer

On Friday Naspers confirmed the acquisition of a stake in a Dubai-based online retailer called Souq.com. Naturally I went and checked it out. Specials for Canon camera's and iPad mini's popped up while categories which include electronics, fashion, watches and jewellery, games and books also have lots of specials on offer. Souq of course is loosely a term for a market in the Arab speaking world.


This article from Zeenat Moorad, retail specialist at Businessday, delved into the details. The acquisition was too small to force a SENS announcement. In fact it doesn't even appear on the website. According to the article Souq.com was founded in 2005 and already has 8 million users a month.


This from the CEO of Souq.com: "We will use the capital from this investment to offer our customers even more choice with a best in class online shopping experience, expanding into new categories such as fashion and lifestyle and opening our own logistics centres in United Arab Emirates, Kingdom of Saudi Arabia and Egypt."


Although it is small these announcements constantly reminds me that the high flying Naspers is still out there seeking opportunities. I say highflying because the stock has had a great year. It's up over 50% this year, now trading at all time highs of R567. In March 2009 it was trading at R142. That is a 4 fold return in less than 4 years. Amazing. It also reminds me that big companies can still experience these kinds of returns. Even back then the company had a market cap of R60bn.


I am encouraged by Naspers growing into online retail. Especially in the developing world. The Middle East has lots of money with people who love to consume. And I really do think online retail is going to become a way of life more and more. People are working more hours, online retail saves time and often money. Here in South Africa if you work during the week and hate the absolute chaos of Saturday morning shopping then this is your only option. I am sure it is like this all over the world.


Much of the company's growth this year has come from the good performance of Tencent in Hong Kong of which they own 34.26%. But I wouldn't underestimate Naspers eye for a good deal and finding a potential new Tencent type whopper. But even if that is not the case, adding good solid online businesses in the developing world to their portfolio will certainly bode well for the future. We are glad we have been fully invested during this great run but would still be adding at these levels.