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Naspers spin-off Prosus surges 25% on market debut in Amsterdam

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09/11/2019 | 04:52am EDT
A logo of Prosus is diplayed at Amsterdam's stock exchange building as Prosus begins trading on the Euronext stock exchange in Amsterdam

AMSTERDAM (Reuters) - Shares in the spin-off of South African e-commerce group Naspers surged more than 25% in the first minutes of their market debut in Amsterdam on Wednesday.

Prosus comprises Naspers' global empire of consumer internet assets, with the jewel in the crown a 31% stake in Chinese tech titan Tencent.

There is "way more demand than is even available, so that’s good," said the CEO of Euronext Amsterdam, Maurice van Tilburg. "It’s going to be an interesting hour of trade after opening this morning.”

Euronext had given an indicative price of 58.70 euros per share for Prosus, implying a market value of 95.3 billion euros ($105 billion).

The shares jumped to 76 euros on opening and were trading at 75 euros at 0719 GMT.

The spin-off in Amsterdam marks the end of an era for Naspers as it looks to move beyond the legacy of former Chief Executive Koos Bekker's prescient investment of just $34 million in Tencent when it was a startup in 2001, one of the most lucrative bets in corporate history.

The stake in Tencent, the world's biggest videogame company and home to China's hugely popular WeChat social media platform, is now worth $130 billion and has buttressed Naspers' rapid growth towards becoming Africa's most valuable listed company.

That would make Prosus the third-largest stock on the Amsterdam exchange after Shell and Unilever, and Europe's No.2 tech firm after Germany's SAP.

European players are still, however, dwarfed by the likes of Facebook and Amazon in the United States.

The Tencent stake has been worth more than Naspers itself for years, and dominated the $103 billion group's finances. One motivation for spinning off Prosus is to narrow that value gap.

The Prosus listing should see about a quarter of Naspers' value move to Amsterdam.

"We believe Prosus will present a new and attractive opportunity for global tech investors to access our unique portfolio of internet businesses, providing a strong foundation for our future growth plans," said Naspers' CEO Bob van Dijk.

"The listing is also designed to reduce our weighting on the Johannesburg Stock Exchange, which we believe will maximise shareholder value over time."

Naspers will retain a stake of about 25% in Prosus, with the other 25% distributed to Naspers shareholders and making up the free float.

FOOD DELIVERY FIRMS

Prosus also has stakes in fast-growing food delivery, social media and payments companies in China, India, Brazil and Russia. [See Factbox: nL5N26118H]

In the food and delivery sector, it owns stakes in Delivery Hero, Takeaway.com, Latin America's iFood, and India's Swiggy.

For the fiscal year ended in March 2019, Prosus reported a 15% rise in revenue to $2.65 billion, and its operating loss narrowed to $418 million from $615 million.

Prosus accounts for its Tencent stake as an "equity accounted investment", which added $3.41 billion euros to 2019 pre-tax profit.

Prosus' net profit ended up being $4.25 billion, thanks to a $1.6 billion windfall on its sale of a 10% stake in Flipkart to Walmart.

Jasper Jansen, an analyst at the Dutch shareholders' rights group VEB, said he welcomed the listing of Prosus.

"We love the fresh blood - finally there's a real company listing here that’s active in the new economy," he said.

However, he criticized Naspers' decision to maintain a two-class share structure system which gives its biggest shareholders extra voting rights in some circumstances.

($1 = 0.9055 euros)

(Reporting by Toby Sterling; Editing by Susan Fenton)

By Toby Sterling

Stocks mentioned in the article
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ACCESS CO., LTD. -1.40% 915 End-of-day quote.-4.19%
AMAZON.COM, INC. -4.13% 2999.86 Delayed Quote.62.34%
AMP LIMITED 0.37% 1.36 End-of-day quote.-28.98%
ASML HOLDING N.V. -1.97% 306 Delayed Quote.18.32%
DELIVERY HERO SE 0.40% 96.4 Delayed Quote.36.05%
DOW JONES AFRICA TITANS 50 INDEX -0.04% 461.35 Delayed Quote.-13.89%
DOW JONES SOUTH AFRICA(ZAR) 0.00% 1616.55 Delayed Quote.-10.40%
EURO / BRAZILIAN REAL (EUR/BRL) -0.49% 6.4891 Delayed Quote.42.11%
EURO / BRITISH POUND (EUR/GBP) -0.48% 0.9128 Delayed Quote.8.66%
EURO / US DOLLAR (EUR/USD) -0.15% 1.16433 Delayed Quote.4.41%
FACEBOOK -2.25% 249.02 Delayed Quote.21.33%
JUST EAT TAKEAWAY.COM N.V. -0.08% 95.34 Delayed Quote.16.08%
JUST GROUP PLC 0.04% 44.8 Delayed Quote.-43.32%
LETS HOLDINGS GROUP CO., LTD. -1.54% 10.22 End-of-day quote.69.21%
LOOK HOLDINGS INCORPORATED -2.29% 852 End-of-day quote.-31.95%
NASPERS LIMITED 5.12% 3044.82 End-of-day quote.32.92%
NEXT PLC -0.72% 6066 Delayed Quote.-12.94%
PROSUS N.V. -1.48% 78.58 Delayed Quote.19.95%
RISE, INC. 0.00% 26 End-of-day quote.-13.33%
S&P AFRICA 40 INDEX -0.12% 152.57 Delayed Quote.-11.39%
SAP SE -0.36% 131.54 Delayed Quote.9.71%
TENCENT HOLDINGS LIMITED 0.49% 514 End-of-day quote.36.85%
THE GLOBAL LTD. -1.03% 193 End-of-day quote.-59.02%
UNILEVER N.V. 0.90% 51.42 Delayed Quote.-0.53%
UNILEVER PLC 0.17% 4789 Delayed Quote.9.85%
US DOLLAR / RUSSIAN ROUBLE (USD/RUB) 0.28% 77.04555 Delayed Quote.22.77%
WALMART INC. -1.68% 135.99 Delayed Quote.14.43%
WILL GROUP, INC. -6.31% 876 End-of-day quote.-30.03%
WORLD CO., LTD. -2.41% 1418 End-of-day quote.-47.31%
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