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Naspers shareholders may never be able to reap the full rewards of its Tencent bet because of the way index investing works, Bloomberg s Alex Webb believes.
It’s one of the most successful investments of all time. The $32 million (R452 million) that Naspers invested in China’s Tencent in 2001 is now worth more than $200 billion (R2.8 trillion). But the South African company may never be able to reap the full rewards of that bet, because the way that index investing works means Naspers is simply too big for its home market to swallow.
The stake in Tencent has made Naspers the largest constituent of the Johannesburg Stock Exchange, accounting for almost a quarter of the index’s weighting. That creates difficulties for large investors that track the index and often limit themselves to having just 12% of their portfolio in any one stock. Because whenever the Naspers share price increases, which it should in line with Tencent’s gains, it
Naspers/Prosus desperation to unlock value gathers steam
Europe’s largest internet company, has announced a share exchange offer to Naspers shareholders. This entails SA-domiciled Naspers shareholders being invited to tender “existing Naspers N Ordinary shares for newly issued Prosus Ordinary shares N.” This is in an effort to narrow the value gap between the Dutch company and a $229bn stake in Tencent. Once the transaction is made complete, the global internet group will hold a 49.5% interest in Naspers. According to Bloomberg, the Cape Town-based multinational has been trying to achieve valuation greater than “the sum of its parts and stop being seen as merely a proxy for investing in WeChat-creator Tencent.” Basil Sgourdos, CFO of both companies, said “It preserves Naspers as the largest South Africa-domiciled company on the JSE and its control of Prosus. The transaction creates immediate value for Naspers shareholders when they swap their higher discount to NAV Naspe
South Africa s Naspers share-price discount is built to survive Covid theafricareport.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from theafricareport.com Daily Mail and Mail on Sunday newspapers.