Naspers to narrow discount by open-ended Tencent sales and stock buybacks

2022/06/27 10:04:00

Naspers to narrow discount by open-ended Tencent sales and stock buybacks

Naspers to narrow discount by open-ended Tencent sales and stock buybacks

The group says the discount to the sum of its parts has reached unacceptable levels amid tech stock pressure

27 June 2022 - 08:35 Karl Gernetzky Picture: BLOOMBERG Africa’s largest listed investment group, Naspers, says it and consumer internet arm Prosus will tackle their share discount through an open-ended share buyback process, fuelled by the steady sale of shares in Chinese media giant Tencent.Subscribe Naspers and Prosus have announced a share repurchase programme, where it will sell a portion of the group’s Tencent Holding shares to buy back its own stock.23 June 2022 - 05:00 Ann Crotty It wasn’t the first time Naspers has issued a profit warning; its substantial investments in various e-commerce ventures, as well as the odd corporate restructuring, make it almost inevitable.26 June 2022 - 18:43 Garth Theunissen The world may be teetering on the brink of a recession that has sparked a slide in stock markets worldwide, but that isn’t deterring SA’s biggest listed asset manager from looking for buying opportunities in the ashes of the market rout.

Naspers holds its about 29% stake in Tencent, worth more than R2-trillion, through Amsterdam-based Prosus, saying on Monday it is seeing opportunity to narrow the discount at which its shares trade, which recently reached “unacceptable levels”.The valuations of global peer group companies in tech and internet sectors declined sharply in recent months as the level of risk appetite reduced significantly amid Russia's invasion of Ukraine and fears of further regulatory crackdowns in China.“Today, we are announcing an open-ended share repurchase programme that is designed to unlock significant value for our shareholders over time,” van Dijk said.Considered among the most successful investments anywhere, the Tencent holding has long presented Naspers with a “problem” of how to close a valuation gap that means the markets ascribe virtually no value to the rest of the company’s businesses.Naspers remained focused on “delivering strong operational growth across our core segments”.Tencent is supportive of the withdrawal by Prosus of its voluntary restriction on the sale of its Tencent shares, Naspers said on Monday, also anticipating that the number of Tencent shares that will be sold per day will represent a small percentage of average daily traded volumes.” “It will also rebalance our asset base towards our fast-growing non-Tencent assets, whose value we expect to increase over time while retaining exposure to Tencent’s significant value creation potential,” he added.“We expect the programme to significantly increase the net asset values per share for Prosus and Naspers,” group CEO Bob van Dijk said..

“It will also rebalance our asset base towards our fast-growing non-Tencent assets, whose value we expect to increase over time, while retaining exposure to Tencent’s significant value creation potential,” he said.“Tencent is supportive of the withdrawal by Prosus of its voluntary restriction on the sale of its Tencent Shares,” the group added.You get the message? This is all about good things happening some time in the future.On June 24, Prosus had a net asset value of $174bn (R2.75-trillion), while it was valued at only R1.It received authorisation from Naspers and Prosus shareholders for the repurchase programme during meetings held on 24 and 25 August 2021.82-trillion on the JSE, a discount of about a third.B Premium This article is reserved for our subscribers..The group said it would request similar permission during its 2022 Prosus Annual General Meeting..

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