- Prosus plans to cut its stake in Tencent to 28.9 percent from 30.9 percent by selling 191.9 million shares.
- South Africa-based Nasper, which owns Prosus, is the largest shareholder in Tencent.
- Tencent’s revenue in 2020 soared 28 percent year-over-year.
Dutch internet company Prosus N.V. said on April 7 that it plans to divest a 2 percent stake in Chinese internet company Tencent Holdings Limited to institutional investors globally.
Through its subsidiary MIH TC Holdings Limited, Prosus intends to sell up to 191,890,000 shares in Tencent. At Tencent’s (HKSE:0700) closing price on Wednesday, the deal could be worth around US$15.5 billion.
This transaction would reduce Prosus’ stake in Tencent to 28.9 percent from the current 30.9 percent. Prosus said it will use the proceeds for investments for general corporate purposes. Meanwhile, Prosus has committed not to sell more shares in Tencent for at least next three years.
Citigroup, Goldman Sachs, and Morgan Stanley are the joint global coordinators and joint book runners in the transaction. Amsterdam-listed Prosus’ other investments in social and internet platform includes Russia-based Mail.ru Group, in which it has a 27.9 percent stake.
South Africa-based consumer internet company Naspers Limited, which owns Prosus, is the largest shareholder in Tencent. In 2018, Naspers reduced the stake in Tencent to 31.2 percent from 33.2 percent and raised US$9.8 billion. At that time, Naspers also committed not to sell more shares for at least three years.
Tencent sees solid growth in 2020
Shenzhen-based Tencent provides value added services, online advertising and financial technology and business services. It is the largest video game vendor and owns the popular Chinese social media application WeChat.
Tencent posted 28 percent year-over-year revenue growth to US$73.88 billion in the year ended Dec. 31, 2020. Profit during the year jumped 67 percent year-over-year to US$24.54 billion. In 2020, Tencent saw its share price jump over 50 percent. Tencent shares closed at HK$566 on Dec. 31, 2020.
Image Source: Refinitiv, Tencent share price in 2020.
Prosus’ 2020 half year revenue up 32 percent
For the fiscal half year ended Sept. 30, 2020, Prosus said its group revenue came in at US$12.7 billion, up 28% year-over-year. Core headline earnings during the period rose 28 percent year-over-year to US$2.2 billion. Prosus said the improved profitability from its e-commerce businesses and growing contribution from Tencent boosted its earnings. Prosus share price in Amsterdam rose 31 percent in 2020.