The Internet nexus we don't hear enough about?: DST, Tencent and Naspers...sitting in a tree..

If you're in the Internet space, or care about it, you've likely heard about Digital Sky Technologies, and almost certainly know about Tencent. If you're based in the USA, my guess is its less likely that you've heard of Naspers. That's why this great article in the Economist was an eye-opener. These companies aren't just growing and building an incredible investment portfolio, but are very closely aligned.

Here's the article's summary on these firms:
"The websites of Digital Sky Technologies (DST) account for more than 70% of page-views on the Russian-language internet. Naspers is Africa’s biggest media group, both offline and online. And Tencent is China’s largest internet company by market capitalisation—and the third-largest in the world."
This is great, but here's where things get interesting:
"...they are financially intertwined. Naspers owns part of and was an early investor in Tencent, of which it now holds 35%. In April Tencent invested $300m in DST, giving it a stake of more than 10% and DST a valuation of about $3 billion. Tencent also has an interest in the Indian arm of MIH, Naspers’s internet division."

This is clearly now a block; a block that becomes even more powerful as it continues to invest internationally as aggressively as
Apple pursues stolen iPhone holders (more in the Economist article.) They benefit from international expertise, and claim to actually share knowledge regularly. There's even a term thrown in there ("geographical arbitrage")

Where this gets particularly interesting is when you consider DST's investment portfolio in the Internet world that people like me are more familiar with: Facebook, Zynga and Groupon

In some ways this isn't surprising. Conglomerates and financial relationships of this sort aren't uncommon in any industry. I wonder if these relationships with their investors helped with some of Zynga and Groupon's recent international acquisitions...

It'll be important to see how this block grows (organically and through investments and partnerships.)

More importantly for large Internet companies that aren't in this block and can never be, it has some interesting implications in terms of the partnerships they can try leverage, and the relationships they can have, as they try to grow.

I'd be very interested in seeing more Web journalists analyze these companies, and their leadership to understand more about what they're thinking.


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