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Newsdeck

New Prosus CEO Inherits Tough Market and Tencent Headache

New Prosus CEO Inherits Tough Market and Tencent Headache
Fabricio Bloisi, chief executive officer of Movile Group, a unit of Napsers Ltd, poses for a photograph in Amsterdam, Netherlands, on Thursday, Aug. 29, 2019. Naspers-owned internet ventures will be carved out into a new $100 billion company called Prosus NV, which is due to list in Amsterdam on Sept. 11.

Prosus NV and Naspers Ltd. have named the first new chief executive officer since the South African-Dutch tech group split almost five years ago. 

Fabricio Bloisi, 47, will become CEO in July, taking over from Bob van Dijk who resigned in September, the companies said in a statement on Friday. Interim CEO Ervin Tu becomes president and chief investment officer. Bloisi was previously the head of the group’s iFood business.

Cape Town-headquartered Naspers is one of the biggest technology investors globally and listed its internet unit, Prosus, in Amsterdam five years ago – but kept a single CEO across both entities. Bloisi will have to contend with the legacy of a complicated business structure that stumped van Dijk, including the group’s investment in Chinese tech giant Tencent Holdings Ltd., and a market environment that’s been tough on some of the group’s dozens of internet businesses.

Bloisi leads one of the group’s success stories in iFood, a Brazilian food delivery operator he wrapped into his Movile e-commerce business. Now fully owned by Prosus, the company is the biggest online food delivery company in Brazil and fulfills 96 million orders a month.

“Fabricio has established iFood as one of the most innovative food delivery companies in the world,” Chairman Koos Bekker said. “He has a combination of vision, deep operational experience and strong discipline. It is this skill set which the board believes make him the right person to now lead us.”

One legacy complication for Bloisi is the impact of the group’s blockbuster early-stage investment in Tencent in 2001 for $34 million.

Since then, the Chinese company’s growth has exploded, with the value of the holding distorting the value of the rest of the business. The group has tried a number of maneuvers to grapple with this, including selling down some of its stake in Tencent to buy back its own shares. So far, the move has created about $33 billion in value over the last 18 months, said Bloisi on a shareholder call.

Van Dijk stepped down last year, shortly after unwinding a complicated cross-shareholding structure he’d set up between Prosus and Naspers to try to address some of the distorting effect of the Tencent stake. Van Dijk became Naspers CEO in 2014 and had headed Prosus since its 2019 listing.

Read More: Prosus CEO Van Dijk Resigns After Simplifying Ownership 

“Fabricio is a strong operator with an entrepreneurial spirit, as he grew a 20 person startup into one of the most successful Brazilian tech stories to date,” Jefferies analyst Sebastian Patulea said in a note to investors on Friday. “However, we argue that his outstanding skills as an owner-operator are unlikely to be fully utilized at the helm of Prosus (given investments in both public and private companies would have their own operators), and we would have preferred a capital allocator with a track record in either private or public market expertise at the helm of Prosus.”

Prosus shares were down 2.7% on Friday in Amsterdam, while Naspers was trading 2.9% lower in Johannesburg at 12.15 p.m.

The group’s strategic goals remain unchanged, and it is on target to deliver a consolidated e-commerce trading profit during the second half of the fiscal year, the companies said. Prosus and Naspers have made big bets in delivery in recent years, with assets also including India’s Swiggy, Germany’s Delivery Hero SE and Germany’s Flink.

“The company’s new CEO is likely to be very hands-on with the company’s food delivery assets (beyond iFood), pushing for better execution and eventually a successful IPO in the long term to generate shareholder value,” said JPMorgan Chase & Co. analyst Marcus Diebel in a note. “We also see a chance for a stronger alignment of iFood and Delivery Hero’s Latin American food delivery operations.”

The group’s other sectors include classified advertising, payments and fintech.

Bloisi said he would move from Brazil to Amsterdam to take on the new position as group CEO, while remaining the chairman of iFood.

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