South African internet and entertainment investor Naspers has listed its international internet assets—renamed as Prosus—on Amsterdam's stock exchange. In the process, it created what is said to be the largest internet company in Europe and one of the top ten in the world based on asset value. Although Euronext reportedly gave a reference price of €58.70 per Prosus share, shares opened at €76 apiece on the first day of trading, surged to an intraday high of €77.40 and closed at €74.19.
Unlike a traditional consumer internet business operating under its own brand, Prosus doesn't offer digital services itself, but rather, holds a portfolio of global businesses across a range of industries including classifieds, food delivery and financial services. The new company, in which Naspers will retain at least a 73% stake, reported 2019 revenue of $18 billion. This may seem like an enormous amount until taking a closer look at its holdings.
Prosus' portfolio includes a 31.1% stake in Chinese tech giant Tencent, which Prosus backed with a $34 million investment in 2001. The holding—now worth $130 billion, according to Reuters—not only dominates Prosus' portfolio, but is the main reason behind its creation. Naspers sought the listing in part to open up its companies to a wider range of investors than those operating in South Africa's capital markets. It also aims to reduce the gap between its market value and that of Tencent, which is more valuable, leading to a discount of its shares. The latter has dominated its finances for years, essentially meaning that investors buying into Naspers are getting the rest of its holdings for free.
Aside from Tencent, Naspers has made some equally savvy bets, now part of Prosus' portfolio. The group is the largest shareholder in Russian internet services company Mail.ru, with a 28% stake said to be worth $1.4 billion. In the food delivery sector, it has holdings in Takeaway.com, Delivery Hero and Swiggy; in financial services, it counts Netherlands-based PayU and Wibmo, which is headquartered in California.
While Europe has gained a new tech titan, the effects will likely be witnessed in South Africa as it reportedly cuts Naspers' weighting on the Johannesburg Stock Exchange from around 25% to 15%. The companies shares closed down more than 30% when Prosus debuted on Wednesday.
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