Less than two months after Naspers and Prosus announced that they were offloading some of their stake in Chinese tech giant Tencent to buy back their own shares, Naspers said on Wednesday it also wanted to start selling its shares in Prosus. It will use the proceeds to buy back its own shares.
“Subject to the requisite approval of the South African Reserve Bank (SARB) being obtained, Naspers intends to dispose of certain of the Prosus shares that it holds in order to continue to fund the repurchase of Naspers shares pursuant to the repurchase programme,” Naspers said in a market update.
Naspers and Prosus previously operated under a cross-holding agreement, which came into effect after a share swap in 2021. Under this, Prosus holds 49% of Naspers ordinary shares, and Naspers owns nearly 57% of Prosus ordinary shares.
A lock-up on the disposal of Prosus shares held by Naspers, as per the agreement, expires on Wednesday.
Naspers said it made an application to the SARB for the approval, and expects a ruling in the coming weeks.
Naspers and Prosus are trading at a large discount to their stake in Tencent. Their plan to offload Tencent shares is aimed at closing the gap.
Since June, its shareholding in Tencent has dropped from 28.9% to 28.8%.
“The discount to the group’s sum of the parts increased to an unacceptable level. Taking substantive action to reduce the discount is a priority,” Naspers said in June.
“The combination of the war in Ukraine, higher inflation and rising interest rates drove up the cost of capital and increased uncertainty,” it said. This combined with other factors, including a decline in the valuation of tech companies globally resulted in a decline in the group’s net asset value for the first time in years.
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