Naspers and Prosus Announce Departure of CEO Bob van Dijk
The sudden departure of Naspers and Prosus CEO Bob van Dijk highlights a complex period for the company, which has been heavily reliant on its holdings in Chinese tech giant Tencent. In June, Prosus, a Dutch-based e-commerce investor majority-owned by South African multinational Naspers, received approval to unwind its intricate ownership structure. The South African Reserve Bank granted Naspers permission to repurchase more of its shares from Prosus. Prior to the current structure, Naspers, headquartered in South Africa, owned a third of Tencent Holdings, a major investment made by Naspers' chairman and founder, Koos Bekker, back in 2001.
Van Dijk played a key role in the decision to separate Tencent and other tech holdings into Prosus in 2019. Meanwhile, Tencent's market capitalization soared to nearly $1 trillion during the COVID-19 pandemic, making Naspers account for almost a quarter of the Johannesburg Stock Exchange, which posed challenges for some fund managers. In 2021, Naspers implemented a crossholding through a share swap deal, with Prosus issuing new shares to acquire a 45.4% stake in Naspers, effectively shifting a portion of Naspers from the Johannesburg exchange to Amsterdam's Euronext.
However, this crossholding arrangement did not provide significant value to investors, leading to its unwinding. On a call with investors, the company announced the completion of the unwinding process and expressed its commitment to maintaining profitability in the first half of the 2025 fiscal year. Erwin Tu, Prosus' group chief investment officer, has been appointed as interim CEO, with Citigroup analysts suggesting a good chance of him becoming the permanent CEO. Tu brings extensive experience from his previous roles at SoftBank Vision Fund and Goldman Sachs.
Despite being a temporary appointment, Tu will have the same autonomy as van Dijk. Naspers' chairman, Bekker, emphasized that the search for a new CEO would consider both internal and external candidates. Tu stated that the company will continue to invest in a disciplined manner, with the share repurchase program remaining in place as long as the discount on the net asset value of the companies remains significant.
Shares of Naspers initially rose 2% in early deals but later slipped 3% in South Africa following the news of van Dijk's departure. Van Dijk will serve as a consultant until September next year but has stepped down from the board of both Naspers and Prosus. The company reassured stakeholders that its strategic goals remain unchanged and it is on track to deliver on its commitments. Van Dijk's recent pay had faced criticism from shareholders, leading to a vote against the company's remuneration policy. His pay was reduced to 5.5 million euros over the past year, down from 13.5 million euros and 14.2 million euros in 2021 and 2022, respectively.
Conclusion: Implications for New Businesses
The abrupt departure of Bob van Dijk as CEO of Naspers and Prosus underscores the importance of leadership stability for new businesses. Leadership transitions can introduce uncertainty and potentially affect investor confidence, as evidenced by the initial rise and subsequent slip of Naspers' shares following the announcement.
Lessons from Complex Ownership Structures
New businesses can learn from the challenges Naspers and Prosus faced due to their complex ownership structure. The process of unwinding this structure was not only time-consuming but also failed to provide significant value to investors. This highlights the importance of maintaining clear, simple ownership structures that are easily understood by investors.
Navigating Leadership Transitions
New businesses should also prepare for leadership transitions. As seen in the case of Naspers and Prosus, having a succession plan in place, like the appointment of Erwin Tu as interim CEO, can help maintain stability during these transitions.
In conclusion, the departure of Bob van Dijk from Naspers and Prosus offers valuable lessons for new businesses. The importance of leadership stability, the challenges of complex ownership structures, and the need for effective succession planning are all key takeaways that can help new businesses navigate their own growth and development.