Prosus will begin selling a massive 28.9% shares in the Chinese software giant, Tencent Holdings Limited, that is worth more than USD 100 billion at current prices.
Basil Sgourdos, Group CFO and Financial Director at Prosus and Naspers, said that the Naspers Board and Prosus Board have great confidence in Tencent’s execution of the repurchase programme. Long-term predictions would result in the group increasing its exposure to Tencent on a per share basis. At elevated levels of trading discount, the Naspers Board and Prosus Board believe that repurchasing Prosus‘ shares and Naspers Shares and implementing the repurchase programme is in the best interests of Prosus, Naspers, and their respective shareholders.
Prosus’ core headline earnings were at USD 3.7 billion for the year ended March 31st, 2022, down from USD 4.9 billion in the previous year.
Prosus disclosed that the plan to sell almost USD 4 billion of stock to e-commerce giant JD.com Inc., was received as a special dividend from Tencent. JD.com gained 6.2%.
The twin deals revive concerns around the long-term viability of holding shares in Chinese internet firms, which are emerging from more than a year of unprecedented scrutiny from Beijing. While Prosus’ investment remains widely in the money, they are selling after Tencent shed by roughly half its value since the peak of 2021.
The Amsterdam-based firm said it will manage the sale of the Tencent stock in an orderly manner.
According to company-provided figures based on analyst reports and market valuations of their stakes in listed companies, the current trading discount of Prosus to the value of assets it owns is 54% and that of Naspers is 65%.
Prosus owns stakes in a wide range of consumer internet companies including meals delivery companies Delivery Hero of Germany and South Korea, iFood of Brazil, Swiggy of India, PayU in payments, Stack Overflow, and Codecademy in educational software. It is sometimes compared to SoftBank and its Vision Fund.
The Group CFO and Financial Director, Basil Sgourdos, said that despite strong revenue growth (as many of them spent money to invest in adjacent markets) trading losses at its e-commerce companies increased.
Prosus was on the course of selling Russian online marketplace, Avito, which had been valued at USD 6 billion before the Ukraine war, he said.
Sgourdos said that the company would comply with sanctions rules in the sale and is currently compiling bids.
About Prosus NV
The firm is a Netherlands-based global consumer internet group and one of the largest technology investors in the world. The company is organized into six business areas, Payments & Fintech, Classifieds, food delivery, Etail, Ventures, and Travel. It also holds investments in listed social and internet assets.
The Payments & Fintech business area includes PayU, a Payment Service Platform.
The Classifieds business area manages digital and mobile marketplaces.
The food delivery business area includes managing food delivery companies.
The Etail business area comprises business to consumer e-commerce companies.
The Venture business area invests in early-stage companies.
The Travel business area operates on an online travel platform.
About Tencent Holdings Ltd
Tencent Holdings Limited (Tencent) is an investment company. The company, through its subsidiaries, provides social networking, music, e-commerce, web portals, entertainment, mobile games, internet services, payment systems, artificial intelligence, and technology solutions. The company was founded in the year 1998 and is headquartered in Shenzhen, China.