Europe's failure to spawn an Amazon or Alibaba has long been a blemish. That will soon change. Sort of
keen users of the internet, but you would not know it looking at a list of the world’s biggest companies peddling stuff and services online. The continent’s failure to spawn an Amazon or Alibaba—the top 20 most valuable internet firms are either American or Chinese—has long been a blemish on Europe’s collective self-esteem. That will soon change.
Sort of. The new firm will certainly be big: analysts expect NewCo, as the outfit is being dubbed until branding consultants come up with an even less inspiring name, will boast a market value of around $100bn. But what would be Europe’s second-biggest technology firm will have little to do with Europe or its consumers. Most of its value will be down to the purchase in 2001 by Naspers of one-third of Tencent, a Chinese group best known for its ubiquitous WeChat app, for $32m.
Splitting the group and relocating part of it to Europe should help close the gap between the value of the stakes in businesses Naspers owns, such as Tencent, and its market capitalisation, which is lower. By the company’s own reckoning, the discount has widened from around 25% four years ago to over 40%. Some of this is inevitable: Naspers couldn’t sell its stake in Tencent without paying taxes, for example.
Others know the feeling. SoftBank, a Japanese conglomerate, owns just under a third of Alibaba but gets insufficient recognition from investors for its other businesses, like Sprint, an American telecoms firm, or a holding in a $100bn venture-capital fund that has rained money onto fashionable startups. Yahoo, an internet pioneer, has been renamed Altaba, a portmanteau of “alternative Alibaba”.
Naspers has no plans to go that far. It will retain 75% of NewCo when it lists it later this year, and has not given up trying to replicate its Tencent jackpot. An investment in Flipkart, an Indian online retailer, made handsome returns when that firm was sold to Walmart last year, for example. The next wager on Europe, anyone?"Going Dutch"
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