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Naspers Unit Soars in Debut to Close Discount With Tencent

Loni Prinsloo and John Bowker

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Naspers Ltd.’s newly listed internet unit received an enthusiastic early response from investors, soaring on its trading debut to close a valuation discount to its biggest investment, Chinese tech giant Tencent Holdings Ltd.

Prosus NV, as the new Amsterdam-listed company is known, jumped as much as 32% in early trading to value the business at about 125 billion euros ($138 billion). The group’s 31% stake in WeChat creator Tencent is worth about $131 billion, the result of a timely investment made almost two decades ago.

The investor reaction is an early vindication of the strategy masterminded by Naspers Chief Executive Officer Bob van Dijk, who took the helm of the Cape Town-based company five years ago. His plan to carve out Prosus into a new listing in Amsterdam was designed to attract a more global investor base and realize more value, while weakening the group’s dominance over the Johannesburg stock exchange.

The move to Euronext is “to facilitate our next phase of growth,” Van Dijk said in an interview with Bloomberg TV just after the market opened. Prosus’s classified-ads business is the largest in the world, while the group also sees fast expansion in internet payments, food delivery and online trading in second-hand goods, he said.

While the discount to Tencent was all but wiped out, the firm is still trading below the sum of its parts when you add other assets, including shareholdings in Russia’s Mail.Ru Group Ltd. and Delivery Hero SE of Germany. Van Dijk’s next challenge will be to generate higher returns from those investments and prove that Prosus isn’t merely a proxy for holding Tencent stock.

“Our next step will be to bed down and invest in our core business units,” Chief Financial Officer Basil Sgourdos said by phone.

Shares in Prosus -- a Latin word meaning ‘forwards’ -- declined slightly after the early surge. The value as of 11:28 a.m. in Amsterdam was 121 billion euros, making it the third-largest publicly traded company in the Netherlands, behind Royal Dutch Shell Plc and Unilever NV. Its market value rivals that of Europe’s biggest tech company, Germany’s SAP SE.

Naspers is retaining a 73% stake in Prosus, and will keep hold of South African businesses including the newspapers that form the basis of the company’s origins a century ago. Its stock rose in Johannesburg, trading 5.4% higher as of 11:28 a.m. local time.

“Naspers has been looking to unlock value in the steep discount applied to its Tencent holding and the successful listing of Prosus today has certainly gone some way to achieving that target,” said Neil Campling, an analyst at Mirabaud Securities. “Prosus is not only the Tencent holding though.”

(Updates with CFO comment in sixth paragraph.)

--With assistance from Swetha Gopinath, Anna Edwards, Matthew Miller and Kit Rees.

To contact the reporters on this story: Loni Prinsloo in Johannesburg at lprinsloo3@bloomberg.net;John Bowker in Johannesburg at jbowker2@bloomberg.net

To contact the editors responsible for this story: Thomas Pfeiffer at tpfeiffer3@bloomberg.net, Jennifer Ryan

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