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UPDATE 1-Naspers takes Tencent stake out of Africa with Prosus listing

Tue, 10th Sep 2019 18:58

* Naspers set to list Prosus subsidiary in Amsterdam

* Prosus holds 31% stake in Tencent worth $130 billion

* Prosus is investment vehicle for BRIC consumer internet

* South Africa's Naspers to retain 75% stake, control

* FACTBOX on listing:(Updates with indicative pricing)

By Toby Sterling

AMSTERDAM, Sept 10 (Reuters) - South African e-commercegroup Naspers is listing its global empire of consumerinternet assets under the name of Prosus on Wednesday -and the jewel in the crown is a 31% stake in Chinese tech titanTencent.

The spin-off in Amsterdam marks the end of an era forNaspers as it looks to move beyond the legacy of former ChiefExecutive Koos Bekker's prescient investment of just $34 millionin Tencent when it was a startup in 2001, one of the mostlucrative bets in corporate history.

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

In a statement, the Euronext stock exchange gave anindicative price of 58.70 euros per share for Prosus, implying amarket value of 95.3 billion euros ($105 billion) in one go.

That would make it the third-largest stock on the Amsterdamexchange after Shell and Unilever, andEurope's No.2 tech firm after Germany's SAP.

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

The indicative price is based on Naspers' closing price inJohannesburg, with trading in Prosus set to start on Wednesdaymorning in Amsterdam.

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

One reason for the discount is Naspers' heavy weighting onthe Johannesburg Stock Exchange.

The stock currently represents around a quarter of the valueof the shareholder-weighted top 40 index, which makes itdifficult for index investors attempting to limit their exposureto a single share.

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

"We believe Prosus will present a new and attractiveopportunity for global tech investors to access our uniqueportfolio of internet businesses, providing a strong foundationfor our future growth plans," said CEO Bob van Dijk.

"The listing is also designed to reduce our weighting on theJohannesburg Stock Exchange, which we believe will maximiseshareholder value over time."

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

FOOD DELIVERY FIRMS

Prosus also has stakes in fast-growing food delivery, socialmedia, and payments companies in China, India, Brazil andRussia. See Factbox:

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

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

Prosus accounts for its Tencent stake as an "equityaccounted investment", which added $3.41 billion euros to 2019pre-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 toWalmart.

Jasper Jansen, an analyst at the Dutch shareholders rightsgroup VEB, said he applauded the arrival of Prosus.

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

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

(Reporting by Toby Sterling; Editing by Pravin Char and JanHarvey)

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