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Apr 14 2009

Naspers quietly invests R1.5 billion in Russia

Published by at 8:06 pm under Companies,Top Stories

I have a little Easter surprise for Naspers shareholders back home. In fact, it’s a double-pack of surprises – the one positive, the other negative. 

Firstly, Naspers increased its stake in Russia’s third biggest portal Mail.ru from 32.6% to 42.8% in December last year. Mail.ru doubled its revenue every year from $2.2 million in 2003 to $55.8 million in 2007 and contributed solidly to Naspers’ profit in the year to March 2008.

Secondly, Russian president Dmitri Medvedev said last week foreign investment in Russia’s big internet portals “constitutes a potential security risk”. 

As far as I can make out, Naspers never announced the investment. It was only reported by the Russian newspaper Vedomosti at the time, and translated into English by this blog

The blog also “guessed” Naspers paid around $150 million (roughly R1,5 billion) for the 10.2% stake. But, we are all just guessing – Naspers is not in the habit of sharing information with its shareholders. 

Read this article (written on 11 February) to see how “confused” the information flow on this deal has been – and still was in February.   

And this just months after Naspers had lost R500 million in Germany without telling anyone. 

And this while “transparency” is the absolute “in” word all over the world today. (Or does that only apply to banks?)

I might add here, that recent efforts of mine to get Naspers to explain its rules for/approach to information dissemination, has come to naught – no response.

I always thought a listed company must pass all information with the potential to move the share price on to shareholders as soon as possible. The JSE has obviously not been concentrating lately…   

Back to the story: According to Bloomberg a spokeswoman of Russia’s Communications Ministry said the ministry is working on “security criteria to determine where foreign ownership might be restricted”. Read the full story and decide for yourself whether the “secret stocking up to 42.8%” was that proverbial “last straw that broke the camel’s back”. 

I don’t think so. Remember, the 10.2% was part of a 27% stake sold by a hedge fund. The rest was taken over by a Russian investor. So, the deal didn’t increase foreign ownership in Mail.ru – it decreased it. 

Still, Medvedev’s warning (also reported by the Austrian newspaper Der Standard over the weekend) doesn’t spell good for Naspers’ Russian exposure.

PS. I just remembered that (some of) my readers might not have enough money to subscribe to Wall Street Journal and would therefore not be able to see the article behind (or below) that link. For those, and with apologies to WSJ, I reproduce the complete story here. Hold thumbs I don’t get pulled off the road. 

APRIL 10, 2009

Russia Is Wary of Foreign Stakes in Internet Firms

By GREGORY L. WHITE

MOSCOW — Russian President Dmitry Medvedev warned of potential “security” risks from foreign investment in local Internet companies, amid growing concern the Kremlin could tighten regulation of one of the last categories of media without major government influence.

Mr. Medvedev and other officials have said they have no plans to regulate the content of the Internet, as authorities do in China, for example. The Kremlin has asserted control over major national television networks and newspapers in recent years, sharply limiting criticism of the authorities.

Internet usage in Russia has surged to about 50 million people in recent years — partly thanks to government programs to wire schools — and it has drawn increasing attention from the authorities, industry officials say.

Russian antitrust regulators last year blocked Google Inc. from buying a major Internet-advertising company from a Russian group. People familiar with the deal said Kremlin officials had privately expressed concern that it would have expanded foreign ownership in the sector. Russia’s leading search engine, Yandex Co., is Russian-controlled but partly owned by several Western investment funds.

Russian President Dmitry Medvedev, shown Thursday, has said he has no plans to regulate the content of the Internet, though the Kremlin has asserted control over major national television networks and newspapers.

Foreign investment in search engines and social networks is “inevitable,” Mr. Medvedev told leaders of the ruling United Russia party at a meeting Wednesday. “But on the other hand — don’t let my words be seen as too conservative — we need to watch this, because these are questions of security,” he said.

The Communications Ministry is working up “security criteria” to determine where foreign ownership might be restricted, a spokeswoman said Thursday. Russian law already requires government permission for significant foreign investment in publications with daily circulation over one million. Several major Russian sites have larger audiences, she said.

Last month, Communications Minister Igor Shchegolev said leading Russian Internet companies and technologies should be locally controlled to keep high-tech talent inside the country.

“Our contacts with the owners of these companies show that they understand their responsibility and the strategic significance of their resources,” he said.

In contrast to his predecessor, Vladimir Putin, Mr. Medvedev has said he is a daily user of the Web. He provides regular updates to a video blog on his site.

“It’s impossible to dominate on the Internet, but the one that will ‘set the fashions’ on the Internet — one or another political force, I mean — that political force has a political future,” Mr. Medvedev said.

Freedom House, a U.S.-based group, ranked Russia as “partly free” in a 15-nation study of Internet freedom, released last week.

One response so far

One Response to “Naspers quietly invests R1.5 billion in Russia”

  1. adminon 14 Apr 2009 at 8:12 pm

    Also read this tongue-in-cheek story of mine on Mail.ru, Naspers and Medvedev written back on 20 October 2008 when Mail.ru turned 10 years old. Little did I know that Naspers’ investment in Mail.ru gave Medvedev sleepless nights…

    Christo

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