Prosus announces $5bn share buyback programme

Prosus, the consumer internet arm of Africa’s most valuable company Naspers, has announced an up to $5bn (R82bn) share buyback programme as it seeks to help close the gap between the value of its underlying assets and its shares.

Prosus was spun out of Naspers and separately listed in September 2019, partly to help reduce the discount at which its shares trade relative to its net asset value per share.

The shares of investment holding companies often trade at discounts, partly due to investor concerns over the efficiency of management structures. In addition, the sheer size of the Naspers stable relative to the JSE often means investors cap their investment in the group to reduce risk.

Prosus said on Friday that the move was a “sensible use of its capital,” intending to buy back up to $1.37bn of its own shares, and up to $3.63bn of the shares of its parent Naspers.

The consumer internet group includes the prized 31% stake in Chinese tech giant Tencent, and several businesses in industries such as online food delivery and advertising.

Prosus had a market capitalisation of R2.56-trillion on Friday morning, when its stake in Tencent alone was worth about R3.7-trillion.

Tencent’s share has jumped almost 57% so far in 2020, driven by investor interest in tech stocks amid the Covid-19 pandemic. Over the same period of time, Naspers has risen 32.7% and Prosus 49.91%.

Prosus intends to launch the buybacks after the release of its results for the six months ended September, expected to be announced on November 23.

In morning trade on Friday, the Prosus share price was up 1.39% to R1,601.91, while Naspers had gained 0.95% to R3,069.31.

Correction: October 30 2020
An earlier version of this article mistakenly said the Prosus Tencent stake was worth $3.7-trillion, when it is, in fact, worth this in rand terms.

gernetzkyk@businesslive.co.za