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Prosus: Naspers Lists Its Giant Tencent in Amsterdam



Naspers ( NAPRF ) The South African company that hit the jackpot with an early investment in Tencent ( TCEHY its own 31% stake in Chinese Internet Group by announcing a new company on the Amsterdam Stock Exchange.
Called Prosus, the company will have a market value of at least 95 billion euros ($ 105 billion) when it is listed on Wednesday, making it the largest consumer technology company in Europe. It is also the second largest technology company in the region after SAP in Germany. On the Euronext stock exchange, only Royal Dutch Shell ( RDSA ) and Unilever ( UL ) are worth more.
Naspers paid only $ 32 million in 2001
for its stake in Tencent. This investment is now worth € 118 billion ($ 130 billion). This is a return that is only matched by SoftBank's ( SFTBY ) $ 20 million point to Alibaba ( BAB BAB ) in 2000, which provided the Japanese company with a share worth of $ 132 billion. But the profits from the invasions created a headache for the Naspers. Now it represents 25% of the total value of the 40 largest companies on the Johannesburg Stock Exchange – up from 5% just five years ago. This forced investors to sell Naspers shares in order not to be overly exposed to one share. As a result, Naspers trades at a discount of about 30% -35% of its assets, said Jean Pierre Werster, founder and CEO of Protea Capital Management.

This is where the relocation to Amsterdam should help. After listing Prosus, weighing Naspers in Johannesburg's top 40 should drop to about 18% -19%, Verster said.

Prosus will also provide funds restricted to invest in European companies that may receive exposure to the Chinese Internet sector for the first time, Werster added.

Tencent, which owns the WeChat messaging platform and numerous payment and mobile gaming applications, is one of the largest technology groups in China. Naspers will continue to own at least 73% of Prosus, which also owns other technology assets such as in-app unit stakes for Hero Hero, an online classifieds business OLX Group, and the Russian Internet company Mail.ru.

Naspers estimates that demand from passive investors in Prosus stocks can accumulate up to $ 3 billion after listing the shares in a number of large global indices. Investments from actively managed European growth and technology funds are expected, Naspers CEO Bob van Dyke said in a video released before the list.

Will Naspers Find Another Tencent?

The transaction also carries some risk for Naspers. Investors need to become more aware of how their other bets are performing, which could determine whether the stock reduction is further narrowed.

Even when Tencent was shut down, Naspers delivered returns of more than 20% annually, far outperforming most of its equity markets, said Ruan Stander, portfolio manager at Cape Town-based asset manager Alan Gray. The company owns 2.2% of Naspers.

Naspers previously sold stakes in an Indian e-commerce company to Flipkart and the Polish-based online marketplace Allegro Group with significant profits.

It will now focus on growing its global business in online listings, food delivery and payments and fintech, said van Dijk. "Listing their OLX listing business may be the next step," says Charles Wolmarans, an analyst at Avior Capital Markets.


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