Why take only a nibble when you can eat the whole meal? That seems to be the logic of Prosus’ €4.1bn acquisition of Just Eat Takeaway. The Amsterdam-listed tech investor was once a ragbag of investments orbiting around one stellar asset, a $146bn stake in Chinese tech giant Tencent, bought for a song in 2021.
Now it is doubling down on food delivery, adding Amsterdam-listed Just Eat to its sectoral portfolio. Newish boss Fabricio Bloisi, himself a food-delivery entrepreneur, is steering the group towards a more hands-on approach.
This shift has echoes of the playbook deployed by private equity funds that are ditching “fix-and-flip” models in favour of sectoral roll-up-and-hold strategies.
Both camps are, at least ostensibly, in for the long term. Both target specific segments and count on building industry knowhow to apply across holdings. There are even profitability gains to be had, in certain overheads and tech, as well as potential for discounted procurement expenses.
Where Prosus differs from traditional private equity is that, like other investment groups such as SoftBank and Warren Buffett’s Berkshire Hathaway, it is also comfortable with taking minority stakes in portfolio companies. The goal is to grow revenue rather than just cut costs.
Prosus has ploughed $10bn into food delivery. iFood, the Brazil-based group that Bloisi founded, delivered over 100mn orders last year, and creamed off a 26 per cent adjusted operating profit margin in its restaurant business. That’s a far cry from lossmaking Just Eat.
Some of iFood’s magic sauce can be applied to the latter. Tech tweaks can benefit all parties involved: voice activated ordering for customers, say; optimised routes for couriers and stronger profiling for merchants. Improving fraud detection and knowing when — and how — to dish out discounts to customers are also applicable across the portfolio.
That is not to underplay the challenges of the sector’s maturing landscape. Third party delivery, so-called 3P, relies on the restaurant carrying out deliveries once the app has taken the order and is the more profitable slice of the market. Growth, however, is from the app-does-all 1P market.
Moreover, Bloisi’s revamped business model is not enough to overcome the old gripe about Prosus and, before that, parent company Naspers. Prosus is still worth a fraction of the sum of its parts; the Tencent stake alone is worth roughly a third more than its market capitalisation. Playing consolidator is smart, but it will need to do rather more to win over investors.
louise.lucas@ft.com