Naspers raises money to invest

On Friday Naspers announced a successful bond issuance of some significance. They managed to raise $750m 6% notes due by 2020. This compared to a similar raising done by the company in 2010 of $700m at 6.375%. A lot has changed since then, the company has grown a lot but interest rates have also increased significantly in recent weeks, especially for emerging markets. According to Bloomberg this is Africa's first overseas corporate bond sale in two months following a massive pullback on emerging market funding. You see how quickly money can talk.


What I find interesting is the sheer size and scale of the bond raising. $750m or R7.5bn is equivalent to the annual profits made from the paid TV business. The cash from that business is what they usually use to fund acquisitions. According to the balance sheet of their latest results, cash and cash equivalents sits at R15.8bn. Balance sheet gearing only sits at 12% so there is plenty room to raise some cash and probably why they got such a competitive rate.


But why are they raising this money? Here is what the announcement had to say: "The net proceeds will be used for general corporate purposes, including future acquisitions and the repayment of certain amounts outstanding under the Naspers group's revolving credit facilities."


It is pretty vague. Companies roll over debt because they feel their cash reserves can be put into better use elsewhere. This means that Naspers have lots of opportunities in the pipeline and as a shareholder this is good news. The company is taking advantage of the low interest environment so that they can grasp any opportunity that presents itself with both hands.


And we are well aware that the company is acquiring with a big focus on ecommerce in developing markets. It is certainly the way of the future. People are busier than ever before. Shopping online saves you time and money. Just the thought of having to park at Sandton City makes shopping online worth every cent. I am sure that parking in Turkey or India is even worse. It is simple and efficient and once people develop trust in the system, I think it will fly. Anyways who are we, or anyone else to question what Koos Bekker thinks the future of technology will be.


As big holders of the stock we welcome this news and wait with anticipation to hear what and where the next acquisition will be.