Naspers, Prosus shares slip after announcement to reduce Tencent stake

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The CEO of Prosus and Naspers, Bob van Dijk.
The CEO of Prosus and Naspers, Bob van Dijk.
Noam Galai/Getty Images for TechCrunch
  • Internet company Prosus, owned by Naspers, has announced plans to sell 2% of its stake in Chinese tech giant Tencent.
  • The shares of both Prosus and Naspers slipped following the announcement on the stock exchange news service.
  • Prosus will use the proceeds to invest in growth and general corporate purposes.

Internet company Prosus, owned by Naspers*, announced plans to sell 2% of its share capital in Chinese tech giant Tencent.

The transaction will result in a reduced shareholding in Tencent, from 30.9% to 28.9%, it said in a statement issued on Wednesday.

Shortly after the announcement, both Naspers' and Prosus' shares slipped.

The Naspers share price which opened at R3 625 on Wednesday, was trading R3 668.33 after the announcement, before falling 5% to R3479.56. By 13:00, the share was trading 3.83% lower at R3 529.14.

Similarly, the Prosus share price trading at R1 671.34 shortly after the announcement fell 3% to R1 616.32. By 13:00, it was trading 2.96% lower at R1 641.90.

"Prosus intends to use the proceeds of the sale to increase its financial flexibility to invest in growth, plus for general corporate purposes," Prosus said in a statement.

The company also committed not to sell any further Tencent shares for "at least" the next three years.

"Prosus's commitment to Tencent remains steadfast. Through the sale of this small portion, Prosus intends to fund continued growth in our core business lines and emerging sectors, as well as allow for complementary acquisitions," said Prosus chair Koos Bekker.

"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," said Prosus CEO Bob van Dijk. He explained that the Covid-19 pandemic "accelerated" digital transformation across the group's growth sectors: online classifieds, food delivery, payments and fintech, education, and e-commerce.

Naspers initially had Prosus listed on the Amsterdam stock exchange in 2019 to close the discount gap between the value of its share price and that of its net assets. The discount gap had widened in recent months. This means that shareholders could get more value in investing directly in Naspers' assets - for example, Tencent.

Van Dijk indicated earlier this year that addressing the discount gap is a priority. The statement issued by Prosus did not indicate explicitly if the reduction in Tencent shares will partly address the discount gap. Fin24 is awaiting response from Prosus and will update the article as and when received.

*Fin24 is part of Media24, a subsidiary of Naspers.

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