(Bloomberg) – Prosus NV plans to raise $ 14.6 billion from the sale of shares in Chinese internet giant Tencent Holdings Ltd., further expanding its military chest for new e-commerce deals.
The Amsterdam-based company will sell a 2% stake in Tencent, reducing its ownership to just under 29%, while remaining the largest shareholder, a statement said Wednesday. The price range was set at HK $ 575.00 to HK $ 595.00, a discount from the last trading price of HK HK 629.50.
The deal will more than quadruple Prosus’ $ 4.6 billion cash reserves at the end of September.
The sale helps boost Prosus’ coffers at a time when e-commerce is booming, with the coronavirus pandemic increasing online demand for everything from shopping and food delivery to education. The company already has assets in these sectors along with similar payment services and has long been looking for further acquisitions.
“The group has some really interesting investments in e-commerce in India, so maybe that’s where some of the capital will go,” said Nick Kunze, senior portfolio manager at Sanlam Private Wealth. “They now have the military chest to take advantage of the opportunities.”
The fundraiser could also give Prosus another chance to secure a mega deal after missing two high-profile takeovers in the past 18 months. The company lost a $ 8 billion battle to buy British food group Just Eat Plc for Takeaway.com early last year, and was won in a tender for ads by EBay Inc. in July. of $ 9 billion from Norwegian rival Adevinta ASA.
At 14:48 in Amsterdam, Prosus shares were trading 3.9% lower. By selling Tencent shares at a discount, the Chinese company’s shares are likely to fall when trading in Hong Kong opens on Thursday. This has an impact on Prosus, according to Roy Topol, portfolio manager at Johannesburg-based Cratos Capital.
Prosus wins from one of the largest venture capital deals of all time. Naspers Ltd., the company’s parent in Cape Town, invested only $ 32 million in Tencent in 2001, when it was an obscure Internet company. The shares are now worth about $ 239 billion.
Although the decision made Naspers the most valuable company in Africa, its market capitalization of about $ 109 billion lags far behind the value of the Tencent holding. The creation of Prosus was partly intended to narrow this discount, but the Amsterdam-based company is also smaller than the size of the stake in the creator of WeChat.
Prosus is committed to not selling more shares of Tencent for at least the next three years, the company said. Naspers sold a similar stake in 2018, a year before allocating share capital and most of its other businesses to what is now Prosus.
(Updates with previous monetary position in the third paragraph)
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