However, investors crowded the group’s new unit, Prosus, sending its shares soaring as much as 32 % on its Amsterdam debut to value the subsidiary at $138 billion (R2.03 trillion). Industry analysts said, on a like-for-like basis, Naspers was actually up by more than 2%, with the decline only reflecting the Prosus unbundling.
Peter Takaendesa, a portfolio manager at Mergence Investment Managers, said the plunge in its stock reflected the unbundling of about 25% of its value to its shareholders. “This is due to the fact that Naspers will own about 75% of Prosus today, compared to owning 100% of Prosus yesterday. However, on a like-for-like basis, Naspers is actually up by more than 2% so far today compared to its close price of R3 523 ($240.74) yesterday (Tuesday),” Takaendesa said.
“The investors who owned Naspers before the listing of Prosus will now own both Naspers and Prosus, so it is important to add Prosus to the Naspers share price when comparing to the old Naspers share price.”
Prosus’s assets include a 31% stake in Chinese internet giant Tencent Holdings. Prosus shares closed unchanged at R1 202.65 ($82)on the JSE yesterday. Naspers would retain a 73% stake in Prosus and keep its other businesses in South Africa.
Nishlen Govender, a portfolio manager at Citadel, said Naspers’ decline was fully expected following the separate listing of Prosus.
Govender said the Prosus’ spin-off sent waves through the market, as was to be expected. “A company splitting itself or divesting part of itself typically results in the reduction of its share price,” Govender said. “It can be thought of as a distribution of value, similar to a dividend. In this case, shareholders were compensated for this loss in value through the allocation of Prosus stock. The Prosus shares investors received came in a 1:1 form, implying that for every Naspers share owned, investors also received a Prosus share,” Govender said.
The value of Prosus’s share was important, because it indicated whether the divestment was worthwhile to shareholders. “The answer, as it stands, is a resounding yes. Prosus is currently trading at R1 201.93 ($82). For context, Naspers management guided to the stock trading at a reference price of €58.70, or approximately R950 ($65), so the current value is significant.
“The value of R950 ($65) effectively left Prosus with a discount to net asset value of approximately 20 percent, so currently levels have erased more of the discount,” he said, adding that the result is significantly more bullish than market participants expected and definitely more positive than Naspers management guided towards. “All things considered, this is a good result for portfolio managers who are long and overweight the stock,” Govender said.
Naspers closed 30.03% lower at R2 465 ($168)on the JSE on Thursday.
--BusinessReport--
