Europe wanted a consumer technology giant to rival Silicon Valley. It’s getting one – along with California-style disregard for public investors.
When Naspers Ltd. lists its technology investing unit in Amsterdam next month, the new company will have a market capitalization that’s likely to top $100 billion, a valuation derived entirely from its 31 percent stake in Tencent Holdings Ltd. The parent trades at a discount to the value of its holding in the Chinese web giant.
...It’s a holdover of Naspers’s current set-up, where the two classes of stock give the chairman and his cohort extra voting rights. Its rationale lies in the Johannesburg-based company’s origins as an Afrikaans newspaper owner. Like The New York Times Co., which has a similar structure, the arrangement is supposed to ensure editorial independence by preventing malign influences from building up a stake and trying to dictate editorial policy. But it also makes it more difficult for shareholders to hold management to account.
...food delivery and e-commerce startups, which is where the new company is directing its funds. Even the argument that a guarantee of independence is required for its stake in Russian social media and messaging platform Mail.Ru seems thin.
...Naspers is listing about a quarter of the new firm, known as NewCo for now, and retaining the rest. While an exchange-traded “N Class” share in NewCo will confer one vote on its owner, the holders of the unlisted “A Class” stock will have 1,000 votes, just as they currently do in Johannesburg...
...The supervoting shares reside in a series of holding companies. ... Irrespective of who ultimately calls the shots, the point is that we don’t quite know. ...
...index operators to exclude firms with dual structures, since no exchange seems likely to push back. S&P Global has taken that route, which is why Snap Inc., which confers no voting rights whatsoever on ordinary shareholders, isn’t a constituent of the S&P 500. But it hasn’t imposed the same rules on those existing listings with dual stocks.
...And it will be difficult to persuade startups planning to list in Europe to adopt a structure which represents all shareholders equally when what could be the region’s biggest tech firm doesn’t.
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