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Prosus close to reaching its R50bn buyback cap

Naspers subsidiary has so far bought 3.4% of its parent group’s N shares.
Buyback is almost done. Image: Dwayne Senior/Bloomberg

Naspers subsidiary Prosus NV is close to reaching its cap of $3.63 billion (R50.5 billion) for buying back Naspers’s N shares.

Prosus announced in late November 2020 that it was setting aside $3.63 billion to buy back the shares. According to calculations based on its Sens announcements on the issue over the last few months, it has to date spent $3.36 billion buying these shares.

This means it has so far managed to acquire 3.4% or 147.4 million of Naspers’s 435.5 million issued N class shares since last year’s announcement.

In the period June 7 to June 11 this year it bought 527 443 Naspers N ordinary shares at an average price of R2 961.10 per share for a total consideration of R1.56 billion or about $114.83 million.

If Prosus continues to buy these shares at the same weekly rate it will reach the $3.63 billion cap in the next few weeks.

Prosus said at the time that the buybacks were a “sensible use of capital” given, among other things, the “sizeable discount to the group’s net asset value”.

At the time it gave no figure for how many shares it planned to acquire.

This particular share buyback is different from the complex and controversial deal it announced a month ago, which is meant to reduce the discount Naspers is trading at relative to its net asset value and has come in for some criticism from asset managers.

Read: Asset managers slam Naspers, Prosus

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Their new business is share price manipulation and management.

Share buybacks are becoming weird.

In the ordinary course, a company, say Apple, generates an obscene amount of operating cashflow by running a mean machine with a 35% return on capital. It already pays a nice and annually growing dividend. It still has way too much cash because in its entire existence it has bought nothing bigger than less than half a percentage of its market cap. So it buys back shares and cancels them. To the point where it will soon have paid out all the capital shareholders ever gave it and all the profit it ever generated. It has negative “equity” in IFRS terms and still makes $70b profits each year.

Then you get how Prosus does buybacks. Blow billions on wannabe unicorns – no own operating cashflow at all. Sell some family silver, blow a staxknof that on acquisitions, buy back parent shares, skipping dividends and not canceling shares.

End of comments.

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