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Prosus to sell 2% stake in Tencent worth $15bn

Naspers said the sale would lower its stake in Tencent to 28.9% from 30.9%.
Image: Jasper Juinen/Bloomberg

Dutch-based technology investment company Prosus NV is to sell a 2% stake in software group Tencent, worth about $15 billion at current prices, in what could potentially be the biggest block trade on record.

Prosus, majority owned by Naspers of South Africa, said on Wednesday the sale to institutional investors would lower its stake in Tencent to 28.9% from 30.9%.

The move highlights the size of Prosus’s Tencent stake, which the Dutch company said it had committed not to reduce further in the next three years.

“The proceeds of the sale will increase our financial flexibility, enabling us to invest in the significant growth potential we see across the group, as well as in our own stock,” CEO Bob van Dijk said in a statement.

Prosus shares fell 4% to 94.52 euros ($112.37) shortly after the news.

The company said it had informed Tencent of its intention before Wednesday’s announcement. It expects to complete bookbuilding for the deal before Asian markets reopen on Thursday. The sale looks set to be the largest block trade on record, based on Refinitiv data.

Based on an offer document, Prosus is selling Tencent shares at HK$575.00-595.00, a 5.5-8.7% discount to its closing price of HK$629.50 ($80.87), and implying proceeds of $14.2-14.7 billion at current exchange rates.

In addition to its Tencent stake, Prosus owns or invests in online food delivery platforms, classified marketplaces and digital payments businesses.

For the half-year ended September 30, Prosus reported a 29% increase in core earnings to $2.2 billion, as proceeds from Tencent offset losses at its other online businesses.

“We expect the news to be viewed cautiously until there is more clarity on how the funds will be redeployed,” said analysts from Renaissance Capital in a note.

The analysts said they did not expect the sale would lead to any short term reduction in the gap between Prosus’s own market value of 160 billion euros and the market value of its stake in Tencent, worth 200 billion euros as of Wednesday.

Citigroup, Goldman Sachs and Morgan Stanley are joint global coordinators of the stake sale.

The largest previous block trade on record was also a sale of 2% of Tencent shares, then held by Naspers, for $9.8 billion in 2018, Refinitiv data showed.

 

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Lovely!

Im glad I sold out.

NPN, PRX has been overbought.

In fact naspers should sell its entire tencent stake….lets see how much its worth then.
As for the JSE…. lets see how it performs without the Chinese Company… Pretty dismal in years to come.

Typical Naspers. Looking after the directors interests and not the interests of ordinary shareholders. It looks like funding for a share by-back scheme.

This is a surprise for the market and a sneaky move from Naspers & Prosus.
Just a couple of months ago, they were lush with cash, now want to sell 2%. Something is fishy.

Not fishy. Naspers has been underperforming

Probably just to raise cash for an acquisition which will need to be big to move the needle.

Dodged a huge bullet not acquiring that silly
Food delivery app.

When will Naspers run out of cashflow if they stop selling TenCent? Cash, not reported IFRS earnings : real cash. The kind that pays the hired help.

They seem to be selling down TenCent shares to cover the negative cashflow of those other parts of the business. You know, those other parts that keep on being refueled by journal entry valuations…

End of comments.

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