The Strategist

Tencent's largest shareholder sells nearly $15B worth of the company's shares

04/09/2021 - 04:14

The Dutch investment fund Prosus, the largest shareholder in Chinese internet corporation Tencent, announced sale of shares in the company for a total of $14.7 billion.

Prosus sold 192 million shares of Tencent, which corresponds to 2% of all shares of the company. This reduced the investment fund's stake from 30.9% to 28.9%, but it remains Tencent's largest shareholder. The entire stake held by the investment fund is valued at $239 billion. Prosus has promised not to sell any more Tencent shares in the next three years.

Prosus was set up in 2019, combining the overseas internet assets of South African holding company Naspers - which holds stakes in a host of companies around the world specialising in online payments, online shopping platforms, online food and goods delivery services, social networking, etc. Naspers invested just $32 million in Tencent back in 2001. Prosus plans to use the proceeds of the deal to invest in new growth internet corporations. 

The deal almost quadruples Prosus' cash reserves from the $4.6bn the company had at the end of September. "The group has some really interesting investments in India's online trading sector, so that's probably where some of the capital will go," notes a senior asset management specialist at Sanlam Private Wealth.

This is the largest case of a so-called package deal: the sale, usually private, of a large block of shares. According to Refinitive, the largest previous example was another Naspers sale of a stake in Tencent: in 2018, it sold 2% for $9.8bn.