Naspers launches share swap deal to reduce impact of Tencent stake

South Africa’s Naspers has launched a share swap deal with its Dutch-listed investment unit in a move that will reduce the impact of its 29 per cent holding in China’s Tencent on local financial markets.

Tencent’s surging share price has caused Naspers to once again balloon to nearly a quarter of the Johannesburg bourse. This has forced South African investors to sell their shares to avoid concentration risk.

In response, Naspers has announced a share swap deal with Prosus, the Dutch-listed subsidiary that owns the Tencent stake.

Prosus has offered to buy 45 per cent of its parent in exchange for its own shares, Naspers said on Wednesday. The deal will give Prosus a 49.5 per cent economic interest in Naspers and raise the free float of what was already Europe’s biggest listed internet group to $100bn, it added.

Naspers will retain control of Prosus from its South African domicile.

Naspers is Africa’s biggest listed company because of its Tencent holding but its shares trade at a steep discount to the value of its stake, which led it to list Prosus in 2019.

Prosus trades at a narrower discount to the value of the Tencent shares.

Prosus’ acquisition of Naspers shares “is intended to be a sustainable construct that addresses the structural issue” while keeping financial flexibility for the European listing, Naspers said.

The offer “preserves Naspers as the largest South Africa-domiciled company on the JSE and its control of Prosus”, said Basil Sgourdos, Naspers’ chief financial officer.