For the first time in 17 years, South African e-commerce multinational company Naspers is shrinking its share in Chinese-based Tencent after raising $9.8 billion from the sale of its 2 percent stake in Tencent.
“The sale allows Naspers to raise a sizeable amount in a short period of time that provides us with ample capacity to fund our ambition in the next three years,” said Nasper’s chief financial officer Basil Sgourdos.
“We engaged Tencent a couple of days ago shortly after the board’s approval thereafter Tencent looked at it very carefully and gave us the go-ahead, and we execute it soon after,” Sgourdos added.
Naspers sold 190 million shares in Tencent via an accelerated book-building process, reducing its holdings to 31.2 percent in order to strengthen its finances and invest over time in its classifieds, online food delivery and fintech businesses globally.
Naspers said it had no plans to reduce its holding further for the next three years, disappointing some investors who had called for it to spin off its 33 percent stake in China’s biggest internet firm to close the widening gap between its own market value and the investment.
Latest financial report showed Naspers Q3 revenue in 2017 grew by 5 percent to $3.1 billion from $2.9 billion in 2016.
The sale was priced at $3,178 (HK$405) per share, a discount of 7.8 percent to Tencent’s closing price on March 27.
Shares in Naspers were down 4.45 percent at 3,153 rand at the market open, while Tencent’s stocks were down 4.51 percent, wiping $24 billion off its market value.
The Tencent Sale Shares will be offered to institutional investors globally, subject to customary selling restrictions. Bank of America Merrill Lynch, Citigroup and Morgan Stanley have been appointed Joint Global-coordinators and Joint Book-runners to manage the transaction.
The share price decline sent Tencent out of the club of companies valued at more than $500billion.
However, with a market capitalisation of $499bn, it is still the most valuable listed company in Asia and the fifth globally.
Tencent is a Chinese technology firm that invests in media, entertainment, payment systems, smartphones, and internet.
The president of Tencent Holdings Martin Lau sold 1 million of his shares with a premium of 5.4 percent on the closing price, according Reuters.
Martin Lau sold some of his shares in Tencent, which securities grew almost double in 2017, at an average price of $55.35 per share. The sold stocks represent 0.01 percent of the company’s equity.
In May and September 2017, Naspers invested 1.2 billion in German takeaway firm Delivery Hero AG and has been involved in 14 deals worth $1.94 billion this year alone.
The South African media company Naspers bought 46.5percent of Tencent in 2001 while the company could not make a profit for the first three years. Having worked with South Korean game developers in the beginning, Tencent now is not only the biggest gaming company in the world but also the biggest internet company since 2004. Founded in 1998, the company is headquartered in Shenzen, China.
Naspers is a broad-based multinational internet and media group, offering services in more than 130 countries. Its principal operations are in internet communication (classifieds, online shopping, marketplaces, online payments and online services), video entertainment and print media. Founded in 1915, the group is headquartered in Cape Town, South Africa.
