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MarketScreener Homepage  >  Equities  >  Stock Exchange of Hong Kong  >  Tencent Holdings Limited    0700   KYG875721634

TENCENT HOLDINGS LIMITED

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Aiming for Just Eat, Prosus says will double down on food bets

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11/20/2019 | 02:40am EST
ust Eat signage on a London restaurant window

The head of Prosus NV's venture capital arm expects to make more investments in the food delivery space globally, building on the hefty stakes it already holds in leading startups in Brazil, India and Germany and its parent company's bid for Britain's Just Eat.

Chief Executive Officer Larry Illg, who also oversees food investments at Prosus, also said that the about $5 billion (£4 billion) the firm had so far pumped into India was just the beginning of further investments in the country as he seeks a successor to his parent company's hugely profitable bet on internet giant Tencent, with that investment now worth $130 billion.

Prosus Group, which was spun off from South African e-commerce group Naspers earlier this year, currently holds stakes in Brazilian food delivery startup iFood, Germany's Delivery Hero and India's Swiggy, all of which are a long way from making a profit.

Amsterdam-listed Prosus, which went public earlier this year, has also bid $6.3 billion for British online food delivery firm Just Eat, topping a rival $5.9 billion bid from Takeaway.com, its main competition in Europe.

Last week, Prosus held firm on its offer. Prosus declined to answer questions on the deal, citing UK takeover rules.

"We love the space (food tech and food delivery)... Will we do more? Absolutely," said Illg. "The opportunity being larger outside the West than in the West in markets like Brazil and India."

Asked specifically about Swiggy and iFood, Illg indicated that Prosus was open to doing follow-on investments in the two firms.

"We do follow on rounds all the time, and have done several rounds in both Swiggy and iFood," a Prosus Ventures spokeswoman said.

Prosus Ventures itself has invested roughly $3.2 billion in startups since its creation five years ago, with much of that funnelled into India, where valuations are lower and the potential consumer markets huge. Its food investments, which are now counted as a separate category, alone account for $2.4 billion of that total amount.

Adding earlier investments by Naspers, some of which Illg now oversees, he said it had a total of about $5 billion in India.

"We still think from a technology and innovation standpoint, we're still in the early innings," Illg said.

"We've put in close to $5 billion in India and we've been frankly more active of late. Compared to five years ago, we see better quality of companies, the ideas are bigger, the founder quality has improved and the market is just coming of age."

STAYING PRIVATE LONGER

Unlike typical venture capitalists, Prosus invests off its balance sheet. Last year, it sold 2% of its Tencent stake for $10 billion, which it plans to use for startup investments.

With doubts about the health of the startup world fuelled this year by the collapse of WeWork's stock market launch and the poor performance of Uber and Lyft, Illg said that a growing number of startups and private firms were considering postponing plans for going public.

"If the IPO window closes and public markets slow down, it would be natural that it flows back into company behaviour," he said.

"We're not solving for an IPO, because we're not looking for that exit per se. We want our companies to achieve full potential and in some cases that makes sense as a public company. In other cases, you don't want the public company scrutiny - you want the freedom to grow," he added.

By Anirban Sen

Stocks mentioned in the article
ChangeLast1st jan.
DELIVERY HERO SE 23.29% 61.84 Delayed Quote.90.28%
EURO / BRAZILIAN REAL (EUR/BRL) -0.09% 4.5688 Delayed Quote.3.14%
FREEDOM HOLDING CORP 2.06% 14.84 Delayed Quote.79.66%
INNOVATION INC. -2.77% 1930 End-of-day quote.179.71%
JUST EAT PLC 0.64% 790 Delayed Quote.34.63%
NASPERS LIMITED 2.94% 2136 End-of-day quote.-23.71%
PROSUS N.V. 2.12% 61.78 Delayed Quote.0.00%
TENCENT HOLDINGS LIMITED 3.44% 361 End-of-day quote.14.68%
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Financials (CNY)
Sales 2019 376 B
EBIT 2019 116 B
Net income 2019 94 549 M
Finance 2019 41 153 M
Yield 2019 0,31%
P/E ratio 2019 32,8x
P/E ratio 2020 28,7x
EV / Sales2019 8,05x
EV / Sales2020 6,31x
Capitalization 3 070 B
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Mean consensus BUY
Number of Analysts 45
Average target price 367,82  CNY
Last Close Price 323,30  CNY
Spread / Highest target 28,5%
Spread / Average Target 13,8%
Spread / Lowest Target -9,16%
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Managers
NameTitle
Hua Teng Ma Executive Chairman & Chief Executive Officer
Chi Ping Lau President & Executive Director
Yu Xin Ren COO & President-Interactive Entertainment Group
Shek Hon Lo Chief Financial Officer & Senior Vice President
Chen Ye Xu Chief Information Officer
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