(John McCann)
Then there were three. Earlier this year tech and media giant Naspers hived off its MultiChoice interests into a separate listing, while last week its internet holdings began trading as a listed entity — Prosus — on the Amsterdam stock exchange. Prosus retains a secondary listing on the JSE.
Prosus comprises Naspers’s global empire of consumer internet assets, including classified advertising, food delivery and payment systems, but most notably its R1.9-trillion share in Chinese internet giant Tencent, which has a R7-trillion market value.
Naspers’s stake in Tencent has made it the most valuable company on the continent by market capitalisation — worth R1.5-trillion — but more than R460-billion short of the value of its Tencent stake.
The Prosus debut last Wednesday created a R1.9-trillion tech listing in Europe, coming in second place behind German tech giant SAP. Naspers will be the majority shareholder of Prosus with a 74% stake. The remaining 26% of Prosus shares will be the free float, meaning they can be freely traded.
Prosus opened last week on the Euronext bourse in Amsterdam valued at €76 a share and ended the trading day at about €74. On its secondary listing on the JSE, Prosus started trading at R1 238.50. By the end of the day the shares were hovering at about R1 202.65.
Naspers had become like an animal that had grown too big for its South African cage, analysts said. The listings of MultiChoice and Prosus are intended to make the company’s assets more tradeable and unlock value for shareholders.
A key aim of moving the internet holdings — dominated by Naspers’s 31% interest in Tencent — to the listing in Amsterdam, is to reduce what has been a massive discount to shareholders who hold the Tencent stake through Naspers rather than directly. This discount, which was 26% before the listing, has reduced slightly to 22%.
But some analysts said that the effect of the Prosus listing remains to be seen. The listing gives European investors access to the assets of Naspers through an international vehicle, whereas those funders’ mandate might not have allowed them to buy Naspers shares on the JSE, said Jean Pierre Verster, the founder and chief executive of Protea Capital Management.
Now that the basket of assets is listed on the Euronext, Verster says many global investors who have in the past considered the Naspers stock as a high risk will have access to the stock internationally. This could result in international investors opting to buy Prosus on Euronext “so that means there could be less activity on the SA exchange trading in Naspers and that could be negative for the JSE”.
Senior equity analyst at Anchor Capital, Mike Gresty, says the transaction has unfolded in the way most investors had expected in that it somewhat reduces the dominance of Naspers on the JSE. Before the Prosus listing, Naspers accounted for about 25% of the JSE’s Top 40 index — up from just 5% five years ago. After the listing it comprises 20% of this index.
Before the listing Naspers was trading at 40% of its net asset value. After the listing the discount narrowed, seeing the stock trading at about 32% to 35% of its value, Gresty said.
He said most unit trusts do not allow fund managers to hold more than 10% of a single stock in their portfolio. This was a headache for local investors who wanted to reduce their exposure. He said Naspers is “still too big” — the problem is reduced, but has not gone away. “A more groundbreaking deal would’ve been a much bigger portion of Naspers being effectively tradeable in that bigger capital pool,” Gresty said.
Instead of one company with 26.2% of the Top 40 index, there are now two: Naspers at about 19.2% and Prosus at about 3.3%.
The head of asset allocation at Sygnia, Kyle Hulett, said this will likely result in investors selling their Naspers stocks to further reduce their concentration risk.
Thando Maeko is an Adamela Trust business reporter at the Mail & Guardian