Tencent booth

The Tencent booth at the 2019 Smart China Expo in Chongqing, China. Naspers’s $32 million investment in Tencent in 2001 is now worth $130 billion. — VCG/VCG via Getty Images

Europe has a new tech giant.

Naspers, the South African media company that hit the jackpot with an early investment in Tencent, on Wednesday spun out its 31% stake in the Chinese internet group by listing a new company on Amsterdam’s stock exchange.

Called Prosus, the company was worth €95 billion ($105 billion) at listing, making it the biggest consumer tech stock in Europe and the second biggest tech company in the region behind German software group SAP.

Prosus shares soared 26% by the close, boosting its market value to €120 billion ($132 billion). On Amsterdam’s Euronext exchange, only Royal Dutch Shell and Unilever are worth more.

Naspers paid just $32 million back in 2001 for its stake in Tencent. That investment is now worth $130 billion. It’s a return rivaled only by SoftBank’s $20 million punt on Alibaba in 2000, which secured the Japanese company a stake that’s worth $132 billion.

But the windfall gains created a headache for Naspers. It accounted for 25% of the combined value of the 40 biggest companies on the Johannesburg Stock Exchange — up from 5% just five years ago. That forced investors to sell Naspers’ shares so they weren’t overly exposed to a single stock. As a result, Naspers traded at a discount of about 30%-35% of the value of its assets, said Jean Pierre Verster, CEO of Protea Capital Management.

That’s where the move to Amsterdam should help. Following the Prosus listing, Naspers’ weighting in Johannesburg’s top 40 should fall to around 18%-19%, said Verster.

Prosus also gives funds restricted to investing in European-listed companies the opportunity to get exposure to China’s internet sector for the first time, Verster added.

Tencent, which owns the WeChat messaging platform and a host of payment apps and mobile games, is one of China’s largest technology groups. Naspers will continue to own at least 73% of Prosus, which also holds other technology assets such as stakes in restaurant app Delivery Hero, online classifieds business OLX Group and Russian internet company Mail.ru.

Naspers estimates that demand from passive investors for shares in Prosus could total as much as $3 billion, after the stock’s inclusion in a number of large global indexes. — (CNN)

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