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$22B in SALES and 32% GROWTH An UNKNOWN company quietly pulling the strings behind
$TCEHY
http://Mail.RU 
OLX
iFood
Delivery Hero
PayU Swiggy
Remitly
Udemy
Brainly
CodecademyHere is an EASY thread
Prosus $PRX.AS is the international internet division of Naspers, which is most notable for acquiring 46.5% of Tencent in 2001 for $ 32m
By 2018, its stake was valued at $ 175B
Naspers then cuts its stake to raise $ 10B
By 2018, its stake was valued at $ 175B
Naspers then cuts its stake to raise $ 10B
Naspers later placed its Tencent stake and other global internet investments into Prosus https://www.reuters.com/article/us-prosus-ipo-idUSKCN1VV1TG
Prosus holds a stake in over 20 businesses across the WORLD, it namely owns:
· 31% of Tencent
· 28% of http://Mail.ru
· 21% of Delivery Hero
· 21% of Codecademy
· 15% of Udemy
· 31% of Tencent
· 28% of http://Mail.ru
· 21% of Delivery Hero
· 21% of Codecademy
· 15% of Udemy
This makes Prosus one of the Top 10 global consumer internet companies
And by far the largest in Europe, before Adyen, Zalando, Ocado, Delivery Hero and Just Eat
And by far the largest in Europe, before Adyen, Zalando, Ocado, Delivery Hero and Just Eat
Great! So this is basically an investment company. What is the master plan?
Naspers made an early and extremely successful bet on Tencent back in 2001
Tencent is growing and hold a stake in many Chinese and international gaming, e-commerce and entertainment companies
Naspers made an early and extremely successful bet on Tencent back in 2001 Tencent is growing and hold a stake in many Chinese and international gaming, e-commerce and entertainment companies
Tencent’s operations enable it to pay a dividend to its shareholders
By holding 31% of Tencent, Prosus got a $ 377m dividend during H1 ’20
Prosus invest this dividend back into new ventures
“Prosus accounts for the Tencent stake as an “equity accounted investment” - a single line that added $3.41 billion euros to Prosus’ 2019 pretax profit.”
From https://www.reuters.com/article/us-prosus-ipo-factbox/factbox-prosus-tech-heavyweight-with-tencent-stake-to-list-in-amsterdam-idUKKCN1VV1TM
From https://www.reuters.com/article/us-prosus-ipo-factbox/factbox-prosus-tech-heavyweight-with-tencent-stake-to-list-in-amsterdam-idUKKCN1VV1TM
Yes! Prosus can count on solid free cash inflows from Tencent
But what is it investing into?
Classifieds
Food Delivery
Payments and Fintech
EdTech
Internet platforms
But what is it investing into?
Classifieds Food Delivery Payments and Fintech EdTech Internet platforms
And its investments are focussed on:
China
India
Russia
Brazil
Europe
In which it has a LEADING position
China India Russia Brazil EuropeIn which it has a LEADING position
Why these geographies
Prosus is trying to replicate its Tencent investment of 2001 by investing in the new giants of today’s growing economics
As an illustration, here is a look at the Indian market:
Number of cashless transaction were multiplied by 8 over the 2014 - 2018 period
Internet users doubled over the same period
Internet costs decreased while data consumption was multiplied by 97
Number of cashless transaction were multiplied by 8 over the 2014 - 2018 period Internet users doubled over the same period Internet costs decreased while data consumption was multiplied by 97
Great! So it is playing in GROWING markets
But how does it selects its champions?
Across its different sectors, it applies a Test - Invest - Scale methodology
But how does it selects its champions? Across its different sectors, it applies a Test - Invest - Scale methodology
It builds a portfolio of promising and founder-led local players Enables its player to take the lead in its market by providing its cash, expertise and network Scales the business by providing a shared service hub and additional capital
How is Prosus picking sectors?
Prosus chases LARGE and growing total addressable markets
Classifieds market is valued at $ 30B by 2023
Payments and fintech market is valued at $ 1.4T by 2022
Food delivery market is valued at $ 331B by 2022
Prosus chases LARGE and growing total addressable markets Classifieds market is valued at $ 30B by 2023 Payments and fintech market is valued at $ 1.4T by 2022 Food delivery market is valued at $ 331B by 2022
Classifieds Prosus owns 100% of OLX and Avito and 80% of LetGo Their brands are leading the market in India, Brazil, Russia and Indonesia
It is making inroads into the auto market with FCG and OLX Cash My Car
Food Delivery Prosus owns 55% of iFood (Brazil), 39% of Swiggy (India) and 22% of Delivery Hero (Global) Brands are leading in Brazil and India and score above 100% YoY growth Prosus aims to drive sales to $ 15B by 2025, up from $ 4.5B today
Payments and Fintech Prosus owns 99% of PayU, a Stripe and Adyen competitor in India PayU generated 37% YoY growth in TPV during H1 ’20 Prosus aims to drive sales to $ 10 - 15B by 2025, up from $ 3B today
EdTech Prosus owns 15% of Udemy, 44% of Brainly and 21% of Codecademy It invested $ 1B across 7 companies and these are growing their user base by +60% YoY Prosus recently invested $ 500m in Skillsoft which counts of 70% of Fortune 1000 companies as their clients
Internet platforms Prosus owns 31% of Tencent and 28% of http://Mail.ru (one of Russia's largest e-commerce and social media) Tencent’s sales grew 28% YoY while http://Mail.ru grew by 20% Prosus invested another $ 25m in http://Mail.ru
Prosus invested $ 589m in portfolio and new businesses in H1 2021
Invested $ 52m in Remitly, the fund transfer app
Invested $ 158m in Movile, a Brazilin investment group with a stake in iFood
Invested $ 100m in LetGo / OfferUp and merged these 2 competitors
Invested $ 52m in Remitly, the fund transfer app Invested $ 158m in Movile, a Brazilin investment group with a stake in iFood Invested $ 100m in LetGo / OfferUp and merged these 2 competitors
Financials Check Revenue grew to $ 12.7B in H1 ’20 up 28% YoY from $ 9.9B the previous year 141% revenue growth in food delivery
70% revenue growth in etail 54% revenue growth in edtech
Trading profit reached $ 2.7B in H1 ’20 up 39% from $ 1.9B the previous year Free cash flow jumped from US$14m to US$370m driven by lower food losses, strong working-cap
THE BOTTOM LINE Prosus is a holding company focussed on high growth sectors in emerging geographies It scouts for leading founder-led companies and then enables it to scale in its market
Prosus invests in markets often overlooked by global tech giants, providing a unique opportunity to invest in fast growing markets such as Brazil and India Its activities are funded for a large part by it’s Tencent stake (31% of Tencent) and the dividends it gets from it
Prosus invests in non-public companies in fast growing markets, providing an excellent entry point into these
Prosus is a holding company and that comes at a discount versus the fair value of the sum of its holdings
We take a full stake into Prosus
Disclaimer - This is not investment advice in any form and investors are responsible for conducting their own research before investing.
Sources
✑ Investor presentation
✑ Company website
✑ Reuters
✑ Wall Street Journal
✑ TechCrunch
Sources
✑ Investor presentation
✑ Company website
✑ Reuters
✑ Wall Street Journal
✑ TechCrunch
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