Tencent's 5th acquisition this year, Koos Bekker influence?

It was announced yesterday that Tencent have made another acquisition in the online retail sector. This time they have bought a 19.9% stake in a Nasdaq listed business called 58.com for $737 million. Here is a description of the company from Google Finance.


"58.com Inc. is a holding company. The Company is an online marketplace serving local merchants and consumers in China through its Website www.58.com and mobile applications. Its online marketplace enables local merchants and consumers to connect, share information and conduct business. The Company's online marketplace contains a range of information in approximately 380 cities, across diverse content categories, including housing, jobs, used goods, automotive, pets, tickets, yellow pages and other local services.


Its online marketing services include listing services, such as real-time bidding and priority listing, and marketing services through collaboration with third-party Internet companies in China. The listings on its online marketplace cover a range of content categories, such as housing, jobs, used goods, automotive, tickets, homecare and relocation, renovation, wedding, business services, travel, education, food, beauty, entertainment, franchise, and other local services."


Sorry for the long description. In simpler terms they are a lot like Gumtree which is an extremely useful service. What is so exciting about these businesses is their ability to push their hundreds of millions of users in directions that benefit them. Tencent can now direct all their users towards the 58.com site. That is an instant synergy which has a clear and obvious benefit without much effort.


We had an interesting discussion in the office today where the question was asked about Koos Bekkers influence in these decisions. He of course is a huge Naspers shareholder. His 1.1% stake in the company is worth north of $1.1bn. As you well know from Sasha's latest analysis of Naspers results, Tencent represents 94% of Naspers at the current share price. This means the Koos will keep a very close eye on what is happening at the company and I'd imagine a large part of his sabbatical will be spent in Hong Kong. And it is certainly no coincidence the Naspers themselves are also investing in similar types of online retail businesses.


I am sure you are very well aware that we fully back the influx into online retail. All four of us in the office have reaped the benefits and efficiencies of ordering goods online. Enough so to convince us that it is going to be a huge part of our future as consumers. Amazon dominate this market in the developed world but because the industry is still so new they have no time to focus on developing markets as of yet. Tencent and Naspers have plenty of gaps to exploit. I expect to see much more activity in this space.