Tencent’s longtime supporter Naspers to cut its shares to fund buybacks
Dutch technology investor Prosus NV said on Monday that it will gradually sell its stake in Tencent to fund a stock buyback in itself and its parent company Naspers.
The company indicated it might sell Tencent shares amounting to 3-5% of Tencent’s daily average trading volume. According to Reuters, Prosus holds a 28.9% take in Tencent worth more than $100 billion.
“This will efficiently unlock immediate value for shareholders because we’re selling (Tencent) shares at full value and we’re buying back our stock at a considerable discount,” Basil Sgourdos, CFO of Prosus, said.
Tencent said it supports the move and expects the impact of the share sale to be “limited”.
Separately, Prosus said on Monday that it had sold over $3.6 billion in Chinese e-commerce group JD.com shares that it received from Tencent, in an effort to bolster its investment-grade credit rating.
Over the past year, Prosus and Naspers shares have fallen sharply amid a tech sector sell-off and a Chinese government crackdown on tech companies.
Naspers was one of the earliest international investors in Tencent, and David A.M. Wallerstein (known as 网大为 in Chinese), who previously worked for Nasper China, was the key to the investment.
While traveling around China, David noticed that OICQ, Tencent’s first-generation instant messaging software, was on the rise. So David visited Tencent and brokered the deal: In 2001, Naspers invested in Tencent at a valuation of $60 million, becoming the largest shareholder at the time. Over the following two years, more contributions were made, bringing its total investment in Tencent to $33 million.
After the South African conglomerate made an early investment, David joined Tencent. Now, he oversees the Tencent’s international business initiatives through identifying cooperation with multinational partners and he is responsible for Tencent’s operations outside mainland China.
Tencent was Naspers’ first major investment in tech industry, and since then, Naspers has increasingly focused on the global consumer internet sector. In 2019, Naspers listed Prosus, its global internet investment business, on Euronext Amsterdam.