Naspers gets R100bn in good news from China
Naspers, a widely held stock by money managers, pension funds and retail investors, is in for a R100bn payday after Tencent unveiled a plan on Wednesday to distribute its stake in Chinese food delivery business Meituan to shareholders.
Tencent’s announcement is good news for its largest investor, Naspers, which owns the stake indirectly via its Dutchlisted e-commerce business, Prosus. Naspers has underpeformed in the stock market over the past two years, shedding more than half its value as it bore the brunt of Beijing’s brutal crackdown on tech firms.
Reporting its third-quarter results on Wednesday, Tencent said it would dish out more than 958-million class B shares in Meituan as a special dividend to existing shareholders.
The stake, valued at $20.3bn (R351bn), represents about 15.5% of Meituan’s stock. Tencent owns 17% of the company.
The market cheered the news, with Naspers soaring as much as 10% to R2,703 before ending about 6% up on the day. Prosus, which houses the group’s 28% stake in Tencent
and will get the lion’s share of the dividend, rallied 9% by late afternoon before ending 6.08% higher at R1,089.48.
Given its equity stake in Tencent and excluding possible deductions, Prosus is set to receive about $5.68bn, or R98.3bn, of the funds.
Tencent has been reducing holdings in portfolio companies to simplify its sprawling structure of investments and to appease Chinese regulators.
In 2021, Tencent cut its stake in China’s second-largest e-commerce business, JD.com, from 17% to about 2%. JD.com stock worth $16.3bn was distributed to shareholders. In June, Prosus sold almost $4bn of JD.com shares, about 4% of the company, saying it did not fit into its overall strategy.
Some analysts have sur
mised that Tencent’s slate of selldowns probably bodes well for Naspers, a scenario that would give CEO Bob van Dijk additional ammunition to fend off pressure from those who are agonising over whether economic growth in China may be sacrificed for ideologically driven policies.
Just last month, shares in the Naspers-Prosus cross-holding entity crashed between 15% and 17%, slashing more than R432bn off its market value after Xi Jinping secured a historic third term as China’s president, tightening his hold on the economy and the government, which has been openly hostile to investors over the past year-and-a-half.
Xi’s re-election, alongside the widening series of regulatory campaigns, has kept investors on edge that nothing is off limits. That includes structures called variable interest entities, which help skirt Chinese rules restricting foreign investment in several sensitive industries.
Prosus owns the stake in Tencent via a variable interest entity set up for Hong Kong listing purposes to allow foreign investors to buy into the biggest tech company in China.
Naspers and its international subsidiary have stood behind the Chinese company responsible for most of the group’s combined R3-trillion valuation. At the start of November, it denied it was in talks with a Chinese investment company to sell its entire stake in Tencent.