Naspers pares stake in China's Tencent

The South Africa-based conglomerate offloaded 189.9 million shares for an undisclosed sum, according to a filing. Its stake in Tencent has fallen from 33.17% to 31.17%. Naspers said it would not sell further shares for at least the next three years. Tencent’s stock was down 5% at HK$417.40 as of late morning trading on March 23, valuing the remaining Naspers interest at HK$1.24 trillion ($157 billion) – which is more than the market capitalization of Naspers itself.

Naspers bought a 20% stake in the company from IDG Technology Venture Investment for $12.6 million in 2001 and then a 12.8% interest from PCCW Cyberworks Ventures for an undisclosed amount, AVCJ Research’s records show. It is said to have committed $32 million in total and ended up with a 36.14% holding following Tencent’s Hong Kong IPO in 2004.

When it went public, the company was responsible for China’s largest instant messaging community – known as QQ –  with 291.3 million registered accounts and 97.1 million active users. An average 848.8 million messages were sent via its network every day. It employed 700 people. Revenue came to RMB734.9 million ($117.5 million) in 2003, while net profit reached RMB322.2 million.

QQ still exists but WeChat is now the most valuable social networking asset in Tencent’s portfolio as well as in China as a whole. It had 2.3 billion monthly active users across its three social networking platforms as of December 2017, although many users have accounts on multiple platforms. The company’s business also covers electronic payment, games and various other forms of entertainment, news and information services, internet utilities, and cloud computing and artificial intelligence (AI) functions.    

Tencent generated RMB237.7 billion in revenue in 2017, up 56% year-on-year, while net profit rose from RMB44.4 billion to RMB71.5 billion. However, revenue fell short of projections in the fourth quarter, user growth slowed, and the company warned that investment in new business areas such as AI may eat into profits in the short term, although it expects to benefit in the long term.

While Tencent did beat analyst estimates for fourth-quarter profit, much of the gains were driven by investments, with the likes of Sea, Sogou, and Yixin Group all completing IPOs.

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• Topics
• Greater China
• Open market
• Technology
• China
• Tencent
• Naspers
• TMT