SA: Naspers Writes-Off R10billion Investment In Russian Social Media Company

FILE PHOTO: Bob van Dijk, CEO of Naspers and Prosus Group poses at Amsterdam’s stock exchange, as Prosus begins trading on the Euronext stock exchange in Amsterdam, Netherlands, September 11, 2019. REUTERS/Piroschka van de Wouw/File Photo

Prosus, a subsidiary of South African conglomerate Naspers, is writing off its R10 billion investment in the VK Group, Russia’s largest internet company. This follows the imposition of sanctions by the United State against VK’s CEO, Vladimir Kiriyenko, and other indirect shareholders. Kiriyenko is a close Putin ally as is among individuals targeted for sanctions in light of Russia’s invasion of Ukraine. He is the son of Sergei Kiriyenko, the first deputy chief of staff of the office of President Vladimir Putin.

The VK Group owns Vkontakte, Russia’s most popular social media networking site with 100 million users as well as Odnoklassniki. In the days following the commencement of Russia’s occupation of Ukraine, other social media sites such as Facebook and Twitter have been banned, leaving Vkontakte as the main large social media network available.

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In its announcement, Prosus says it had also asked its directors on VK’s board to resign their positions immediately. Three directors linked to Napsers stepped down on March 4 while two independent directors left their positions on Monday.

Prosus, which owns a 25.7% stake in VK, joins other international firms that have distanced themselves from Russia, which has been hit by a wave of sanctions related to the Ukraine crisis. It says it expects to write down the full carrying value of its VK assets, totalling around 700 million US dollars in the current reporting period.

The company says that it would be finding ways to support affected staff. “Our primary concern is the well-being of our employees and we continue to support all of our people in the region. Over the last week, international sanctions have been imposed on many Russian entities and individuals. These include sanctions on the CEO and indirect shareholders of online platform VK Group, in which Prosus holds a minority stake.  As a consequence of these sanctions, Prosus asked its directors on the VK Board to resign their positions.”

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