South Africa: Naspers Finds Nasdaq a Drag, Heads for London


South African media group Naspers said last week it would delist from US-based Nasdaq because of the cost of regulatory requirements. The company said it intended listing on the London Stock Exchange (LSE), which had a larger appetite for companies in emerging markets.

The company's decision to delist from Nasdaq would have little bearing on local shareholders, said analysts. They said the decision was based on the high costs of maintaining listing and registration in the US. Complying with US obligations, especially the provisions of the Sarbanes-Oxley Act of 2002, had led the company to take advantage of the US Securities and Exchange Commission (SEC) having recently relaxed its rules relating to delisting by foreign companies, said Naspers' chief financial officer Steve Pacak.

Sarbanes-Oxley was instituted by the SEC in 2002 to tighten up the transparency profile of listed companies following scandals such as the Enron debacle. The result is expensive auditing practices that have to be implemented.

Abdul Davids, portfolio manager at Allan Gray, said the delisting would not affect the company's primary listing on the JSE. He said the Naspers shares listed on the Nasdaq made up about 1% of the total issued share capital. While any form of cost cutting was beneficial, the estimated annual saving of R30m would not benefit shareholders to any great extent.

"It was never a conscious decision for them to list on Nasdaq in the first place," said Davids, citing Naspers' purchase of multinational pay-television media company MIH in 2002 as the reason behind the listing. Pacak said a London listing would give shareholders in other countries the opportunity to buy into Naspers' growing interests in emerging markets, including Brazil, Russia and the east. Pacak said the LSE was also far more receptive to emerging market trends.

Business Day (Johannesburg), 18 May 2007