Tencent backer Prosus to cut $134b stake to fund buyback

Bloomberg

Prosus NV is planning to sell more of its $134 billion stake in Chinese internet giant Tencent Holdings Ltd to finance a buyback program, reversing a pledge to hold onto the full shareholding.
Tencent erased earlier gains in Hong Kong as investors pondered the extent to which Prosus, the Chinese company’s biggest shareholder, will unload its stock. The shares fell as much as 2.5% and traded 1.8% lower.
“We will keep selling Tencent shares to buy back our own shares, it’s open-ended and an unlimited program,” Prosus CEO Bob Van Dijk said. “It’s actually a small part of Tencent daily traded volumes — it should be maximum between 3 to 5%.”
The move represents a change of heart by Dutch e-commerce giant Prosus — majority owned by South Africa’s Naspers Ltd — which said after its last sale in April 2021 it wouldn’t offload more shares for three years. The company, spun off from Naspers in 2019, owns the 29% stake after its parent became an early Tencent investor more than two decades ago, bagging a multi-billion dollar return in one of the most profitable early bets in tech investment history.
Prosus is valued at $123 billion even after the share jump, compared with the $134 billion Tencent stake. This means the market values the rest of the company’s assets, which include food delivery, travel bookings and online education sites across the world, at less than zero. Prosus disclosed the plan on the same day as it reported the sale of almost $4 billion of stock in e-commerce giant JD.com, received from Tencent as a dividend.
The twin deals revive concerns around the long-term viability of holding shares in Chinese internet firms.
While Prosus’s investment remains wildly in the money, they are selling after Tencent shed roughly half its value since a 2021 peak, hammered by the government’s campaign to curb the power of its largest internet corporations.
Prosus said it will manage the sale of Tencent stock in an orderly fashion. Prosus aims to focus on increasing the value of non-Tencent assets, Van Dijk said, while retaining exposure to the Chinese company. The group is looking for buyers for Russian classified ads business Avito.