Naspers, Prosus end week in style
New listing in Amsterdam closes higher than stake in Tencent
Technology group Naspers’s attempt to reduce its weighting on the JSE while reducing its discount to underlying assets looks to be bearing fruit as its new listing in Amsterdam closed the week more valuable than its prized stake in Chinese technology group Tencent. What remains to be seen is whether shareholders will elect to take up stock in the new vehicle.
Technology group Naspers’s attempt to reduce its weighting on the JSE while reducing its discount to underlying assets looks to be bearing fruit as its new listing in Amsterdam closed the week more valuable than its prized stake in Chinese technology group Tencent.
What remains to be seen is whether shareholders will elect to take up stock in the new vehicle or keep 100% of their investment in Naspers.
The new international listing, Prosus, had its market debut in Amsterdam on Wednesday, valuing it at about R1.9-trillion and handing Europe its biggest consumer internet company.
Peter Takaendesa, portfolio manager at Mergence Investment Managers, said: “If you combine the Naspers and Prosus shares that a prelisting Naspers shareholder owns now, then their like-for-like investment in Naspers is actually up over 4% so far this week.”
Naspers closed the day on Friday 0.91% higher at R2,496.95.
Prosus ended the week with a market value of $134.44bn with its shares 1.66% up on Friday at R1,187.35. Tencent was worth about $132bn.
The listing relocates to Amsterdam a third of Naspers’s outsize valuation on the JSE, where fund managers had become forced sellers to avoid being overexposed to a single stock.
It is the biggest step yet by CEO Bob van Dijk to reduce a valuation gap between Naspers and Tencent.
Shareholders have the option to elect to get more stock in Naspers, or stock in Prosus, on a one-to-one basis for each share they hold in Naspers.
If a shareholder has 1,000 shares in Naspers, they can elect to get 1,000 shares in Prosus, according to the arrangement.
Nesan Nair, portfolio manager at Sasfin Securities, said to his knowledge most shareholders wanted to go for Prosus. Now that investors have an avenue to invest in Naspers’s international assets, Nair said demand for Naspers will weaken over time, but it will still be strong.
Despite this feeling among stockholders, investors may have to consider how authorities will tax them for the transaction, particularly capital gains — a tax levied on profit from the sale of property or an investment.
“If we had the option, we would take more Prosus shares,” said Asief Mohamed, the chief investment officer at Aeon Investment Management.
He said that for their clients, mainly consisting of retirement funds and unit trusts, the transaction would not attract capital gains tax (CGT).
For individual investors, the story may be different.
“Individual Naspers shareholders will be subject to CGT now if they elect to receive Prosus shares.
“However, it does not automatically mean that they will pay CGT as some might have capital losses from other investments in their portfolios to use to offset the CGT that may be due on their Prosus shares,” Takaendesa said.
“Given that the majority of Naspers shareholders are pension funds and also that the Prosus shares have traded well so far, it is likely that most investors will elect to receive Prosus shares,” he said.
Those going for more Naspers shares will see their base cost per share decrease as the new shares will be at zero cost, said Nair.
0.91% was the gain Naspers shares made by close of day on Friday
1.66% was Prosus’s increase
$134bn the value of the new international listing in Amsterdam