Interim Prosus CEO Ervin Tu promises discipline and stability

Ervin Tu, newly appointed Naspers and Prosus interim CEO following the announcement on Monday of Bob van Dijk’s sudden departure, has promised investors stability and discipline in a call with investors.

“My very first priority is continuity. My intention is not to change the canvas, but to add to that canvas and make it better,” Tu said. “You should not anticipate any other significant management changes that arise from this transition.”

One of the major issues facing Naspers, with which Van Dijk was tasked, was reducing the discount at which the company’s shares have historically traded relative to its investment in Chinese internet giant Tencent Holdings. Through Prosus, Naspers owned a 27% percent stake in Tencent. Tencent is listed on the Hong Kong Stock Exchange and trades for more than parent company Prosus, meaning investors undervalue the businesses (other than Tencent) that Prosus owns.

A share buyback scheme involving the sale of the more expensive Tencent stock and the repurchase of Prosus’s own shares has had positive “value unlocking” effect on the company. “We will continue the open market share programme as long as the discount remains available,” Tu said.

He emphasised that his interim role does not come with any limitations regarding his decision-making abilities. “I have the full support of the board,” he said. The board’s support comes with a healthy balance sheet so investors were keen to know how Tu would use the capital available to him. He cautioned against conflating a free rein with imprudence.

Read: Bob van Dijk steps down as Naspers and Prosus CEO

“We look carefully at how best to invest that capital in a manner that maximises value for our shareholders. We are in a fortunate position to have the cash that we do, so must take the time to consider the opportunities out there and if we don’t find ways to maximise value, then we will be patient and wait,” Tu said.

‘One of the best’

Currently the group’s chief investment officer, Tu has been with Prosus since August 2021. Before joining Prosus, he was managing partner at the SoftBank Vision Fund, a venture capital fund founded by Japanese multinational conglomerate SoftBank.

Asked about the share buyback scheme possibly representing Naspers’s loss of faith in Tencent, Naspers chairman Koos Bekker affirmed that the company’s stake in Tencent remains core to its strategy. “We still believe it is one of the best companies in the entire world. We have an extremely high regard of Tencent, that is our main investment and we are proud of that association,” said Bekker.

Regarding Van Dijk’s sudden exit, Bekker said the CEO’s decade-long tenure was well above the five-to-seven-year average for a CEO. “Every few years you must hand over the baton and we felt now is a good time to do it. When you decide on a transition you must do it immediately. So when Bob agreed we simply said, ‘Here is a point of transition, let’s get on with it.’”

“The boards of Prosus and Naspers want to thank Bob for his leadership over a full decade,” said Bekker. “During this time, substantial businesses were established in classifieds, food delivery and payments, while we also entered several new fields. We appreciate Bob’s contributions and wish him much success with his future career,” said Bekker.

“It was a successful 10 years, but it is a good time for a handover. When we decide on a transition, it needs to be done immediately. The outgoing CEO loses authority.”  — © 2023 NewsCentral Media

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