Early Tencent investor cashes in after 6,000 per cent gain, sending stock lower
Naspers is selling $10.6 billion of shares in Tencent Holdings that it bought for $32 million in 2001
South African media company Naspers Ltd is cashing in a sliver of one of the greatest venture-capital investments ever.
The Cape Town-based company is selling $10.6 billion of shares in Tencent Holdings Ltd., equal to 2 per cent of the stock in the Chinese operator of the WeChat messaging service, it said in a statement Thursday. The stake Naspers bought for just $32 million in 2001 – when Tencent was an obscure Web firm in a nation where few people used the internet – is now worth $175 billion.
Tencent’s shares fell 7.8 per cent to HK$405 as of 9:31am in Hong Kong trading.
The sale comes hours after Tencent, Asia’s most valuable company, warned it would sacrifice short-term margins, spending on content and technology in pursuit of growth. While the forecast led to a 5 per cent slump in Tencent’s stock, Naspers said it still considers the company “to be one of the very best growth enterprises in any industry in the world, managed by an exceptionally able team.”
Naspers might have remained a little-known publisher of South African newspapers and operator of pay-TV services if not for the decision to invest in Tencent. While the investment has made Naspers the most valuable company in Africa, its market capitalisation of about $122 billion lags well behind the value of the Tencent holding, suggesting investors assign no value to it other businesses.
Naspers’s quandary is similar to those faced by other companies that made hugely successful investments in technology start-ups that eventually overshadowed their operating businesses, such as the winning bets Yahoo! Inc. and SoftBank Group Corp. made on Alibaba Group Holding.
