Naspers dodges a bullet in India ... and takes a fat profit



Naspers dodges a bullet in India ... and takes a fat profit

Sale of e-commerce business to Walmart came just in time as India tightens up its online sales rules

Nick Hedley

As it turns out, Naspers may have exited Flipkart at a fortunate time. In May 2018, Africa’s biggest public company sold its 11.2% stake in the Indian e-commerce business to Walmart for $2.2bn. This happened when the US retail behemoth took over 77% of Flipkart.
The rationale for the divestment was that Naspers’s influence over Flipkart would have been heavily diluted by Walmart.
Less than a year later, India’s e-commerce sector is set for a shakeup. Citing analysis by PwC, Reuters has reported that India’s new foreign investment restrictions on e-commerce could reduce online sales in the country by $46bn by 2022.
E-commerce firms including and Flipkart will, from February 1, be unable to sell products via companies in which they have an equity interest or push sellers to sell exclusively on their platforms.
The rules, which were announced in December, just months before a general election due by May, are seen as an attempt by Prime Minister Narendra Modi’s government to appease millions of small traders and shopkeepers, Reuters said.
Naspers still has a number of investments in India, including in the online travel and online food delivery sectors, but the company might be breathing a sigh of relief.
At the time of the sale, Naspers CEO Bob van Dijk said the company had sold out mainly because it would lose its influence over Flipkart, where it had board representation.
“That’s obviously going to change. When a company buys 77% of [another], they will run that board, and then that changes it from a strategic investment to a financial investment [for Naspers].”
Naspers had also realised “a great return for our shareholders” since it had put just $616m behind Flipkart since it first invested in the company seven years ago.

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