Koos Bekker - in search of a new grand-slam investment

Koos Bekker has spent 15 years riding the rocket of the Chinese Internet thanks to one really smart - or really lucky - investment. Now he’s trying to do it again.

In 2001 Naspers Ltd., the media group he chairs, put $32 million into a then-obscure web company called Tencent. Its stake today is worth $66 billion — roughly equal to Naspers’ entire stock market capitalisation. To prove he’s capable of more successes like Tencent, Bekker is scouring the globe in search of new tech deals .

“What we’ve done over the years is take huge risks,” Bekker said over a cup of Rooibos tea in Naspers headquarters, 19 floors above Cape Town's harbor. The task now, he said, is “to find the countries where the gaps still exist because in many countries the good opportunities have been taken.”

Bekker, 62, is seeking to prove Naspers is more than a giant venture-capital fund built on a single grand-slam investment. The markets accord little to no value to the company’s other businesses, including Africa’s largest pay-TV network and investments in dozens of other startups.

A year ago, Bekker stepped down from running Naspers for a year-long “sabbatical” that took him to Shanghai, Seoul, San Francisco and elsewhere in search of new ideas. He says the time away convinced him the firm needs to double down on e-commerce in developing countries — even though there’s a lot more money chasing emerging-market Internet deals today, and brutal competition both from locals and US giants like Amazon.com Inc.

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Naspers is almost unrecognizable from the company Bekker took over as chief executive officer in 1997. At the time, it was called Die Nasionale Pers, or The National Press, and was principally known as the publisher of Die Burger, an Afrikaans daily that was a staunch defender of apartheid. Though the editorial line has changed, Naspers still publishes the paper. Bekker now serves as chairman and has given the CEO job to former EBay Inc. executive Bob Van Dijk.

Using cash from the pay-TV division, which was founded in the 1980s, Bekker started plowing funds into more than 100 technology businesses around the world. Most of those bets bled money: Online retailers in Africa had to be shut down, and the company took an $80 million loss on a Chinese Internet service provider.

When Naspers bought half of Tencent in 2001 (since diluted to 34 percent), the Chinese company was a fledgling player in a country with minimal Internet use. Today more than a billion people use Tencent’s messaging services, such as WeChat. On May 13 the firm reported record profits from its vast range of online businesses.

A deal with Russian portal Mail.ru Group Ltd. was another win, albeit less spectacular. Naspers bought 30% in 2007 for $165 million; its current 29% holding is valued at about $1.6 billion, though the shares have fallen by almost a third since the start of the Ukraine crisis.

Naspers is Africa’s biggest company by market capitalisation, worth about $66 billion. Its shares have climbed more than 500% since 2010, thanks largely to Tencent, growth that’s allowed its chairman to acquire some of the trappings of tech super-wealth. Bekker is now worth some $2.5 billion according to the Bloomberg Billionaires Index, and he and his wife spend much of their time at Babylonstoren, a sprawling farm and luxury hotel they own in the Cape winelands that dates to the 17th century.

Yet when it comes to betting on emerging-market tech winners, “there are no more secrets,” said Ciaran O’Leary, a partner in Berlin at Earlybird, a venture capital firm that invests in Turkey and eastern Europe. “Valuations are even higher than the US in many cases.”

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Closer to home, Naspers’ pay-TV business is bracing for assaults from Netflix Inc. and Apple Inc. That’s forcing it to invest in mobile applications to deliver content more widely in a region where high-speed landline connections are rare, and to find ways to sell movies to poor consumers while still eking out a profit. A sustained slowdown would reduce Naspers’ cushion for bad bets on startups.

Some of Bekker’s more recent investments face a long road to success. Naspers owns 19% of Flipkart, an Indian online retailer that’s locked in a head-to-head battle with Amazon, which last year said it would spend $2 billion to expand in the country. Another flagship Indian investment, travel site Ibibo, needs to fight off the likes of Google and Kayak.com.

Bekker said the epiphany of his working holiday - which made him more determined to stick to his strategy - came after he gave a lecture on entrepreneurship at China’s Nanjing University. The moment he finished, Bekker was “absolutely stormed by people with pitches,” he recalled. “One guy will say, ‘give me one minute to just explain my concept,’ another one will say ‘here’s my paper, its three pages, please read it,’ so you feel absolutely enormous ambition,” Bekker said.

His vision is for Naspers to become a leading e-commerce presence in places that American tech giants haven’t yet focused on. Though Bekker concedes it’s a difficult game, he argues the hunger of consumers and entrepreneurs in India, China, Africa, and Eastern Europe offer ample opportunity for those willing to wait for their bets to pay off.

 “E-commerce is not a get-rich-quick business,” Bekker said. ‘You need a good amount of patience.’’

- Bloomberg