Prosus, one of the world’s largest technology investors, has recently decided to keep reducing its holdings in Tencent as part of its open-ended share repurchase program that started in June.
According to a Da Ji Yuan report on November 27, Prosus is a South African media giant Naspers unit. By owning about 28% stake indirectly via Prosus, Naspers is currently Tencent’s biggest shareholder.
As of November 23, Prosus’s net asset report showed that the company held 2.61 billion Tencent shares, which reduced 78.9 million from the 2.69 billion shares on October 28.
The outlet noted that Prosus already announced its holdings cut plan on June 27.
The Amsterdam-based investor said it would use the earnings from selling Tencent shares to repurchase its shares and those of parent Naspers.
Basil Sgourdos, CFO of Naspers, said, “This will efficiently unlock immediate value for shareholders because we’re selling (Tencent) shares at full value and we’re buying back our stock at a considerable discount.”
As a result, Tencent’s stock prices dropped by over 4% on the same day and have continued to decline from HK$400 per share since then.
From September to October, despite not being impacted by Prosus, the company’s shares tumbled by more than 30% and hit the lowest level on October 28.
By the end of last month, while Tencent still suffered from falling stock prices, Asian Tech Press published an article claiming that a CITIC-led group was in talks with Naspers to buy all of its Tencent shares to replace the controlling shareholder.
But Prosus refuted the acquisition rumor and said the article is “speculative and untrue.”
As reported by SCMP, Tencent’s revenue in the last quarter just reached nearly $20 billion (140.1 billion yuan), down 2% year-on-year. On the other hand, net income climbed about 1% to $5.57 billion (39.9 billion yuan).
In addition, under the pressure of the CCP’s brutal tech crackdown and ailing economy, the Chinese internet giant has already laid off 1,879 staff after cutting 5,500 jobs in the second quarter.
It’s a part of the company’s efforts to reduce operating costs amid economic and regulatory challenges undermining major industries, including gaming and advertising.