Prosus NV is planning to sell more of its US$134 billion stake in Chinese Internet giant Tencent Holdings Ltd (騰訊) to finance a buyback program, reversing a pledge to hold on to the full shareholding despite regulatory uncertainty.
Tencent yesterday 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 percent and closed 1.56 percent lower.
“We will keep selling Tencent shares to buy back our own shares,” Prosus chief executive officer Bob Van Dijk said in an interview. “It’s actually a small part of Tencent daily traded volumes — it should be maximum between 3 to 5 percent.”
Photo: Reuters
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 last year that it would not offload more shares for three years.
The company, spun off from Naspers in 2019, owns the 29 percent stake after its parent became an early Tencent investor more than two decades ago, bagging a multibillion-dollar return in one of the most profitable early bets in tech investment history.
Prosus shares soared 12 percent in early trade in Amsterdam, the most since March, while Naspers gained as much as 16 percent in Johannesburg.
Prosus disclosed the plan on the same day as it reported the sale of almost US$4 billion of stock in e-commerce giant JD.com Inc (京東), received from Tencent as a special dividend.
The twin deals revive concerns around the long-term viability of holding shares in Chinese Internet firms, which are only just emerging from more than a year of unprecedented scrutiny from Beijing.
While Prosus’ investment remains wildly in the money, they are selling after Tencent shed roughly half its value since a peak last year, hammered by the government’s campaign to curb the power of its largest Internet corporations.
Prosus said it would 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 also looking for buyers for Russian classified ads business Avito following the sanctions imposed on the country after the invasion of Ukraine.
Tencent said in a separate statement it supported its shareholders’ decision and expects limited impact on the Chinese social giant itself.
“People are concerned about the upcoming selling pressure on the stock especially after it rebounded to nearly HK$400 recently,” Steven Leung (梁偉源), executive director at UOB Kay Hian Ltd (大華繼顯控股), said by telephone. “It has clouded the share outlook in the near term for sure.”
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