Prosus listing expected to reduce Naspers weighting on the JSE to 15%
DURBAN – Naspers' s listing of its new global consumer internet group, Prosus, on the Euronext stock exchange in Amsterdam tomorrow is expected to reduce its dominance on the JSE.
Naspers is expected to drop to about 15 percent of the JSE’s equities benchmark from its current weighting of 21 percent. The reduction is seen as good news by a number of fund managers concerned about Naspers’s weighting in the main local index.
However, Nishlen Govender, a portfolio manager at Citadel, said fund managers at this point care about one thing only: Naspers’s discount to net asset value.
“At 40 percent in recent times, it has been frustrating. Will the Prosus listing assist? No one knows for sure, but it does seem likely. A key reason for this is the lack of marginal buyers for the stock at this time,” Govender said.
He added that, given the weight in the index, those that were enthused to buy Naspers had already done so.
“The local listing has thus failed to reduce the discount. In theory, the offshore listing exposes the company to new shareholders in a sophisticated European market. If this drums up support, then the discount for Prosus could be narrower. If this is the case, then it will be excellent for portfolio managers,” he said.
Govender said that, at this point, estimating the discount at which Prosus would trade relative to the underlying assets was still guesswork, but it would be interesting.
“The balance of probabilities does, however, lie with the discount closing,” he said.
Naspers expects to own no less than 73 percent of Prosus with a free float of up to 27 percent created through a capitalisation issue of Prosus shares to Naspers shareholders. Naspers will retain its primary listing on the JSE.
Prosus will hold assets, including a 31 percent stake in Chinese internet giant Tencent Holdings, worth about $125 billion (R1.84 trillion).
Peter Takaendesa, a portfolio manager at Mergence Investment Managers, said the potential benefits of listing Prosus included attracting a new group of Naspers buyers, as developed-markets investors would now have the shares listed in Europe, and the concentration risk caused by Naspers’s size on the JSE would be reduced, although not eliminated.
“South African investors have largely been forced sellers as Naspers’s size on the JSE continues to grow, because most pension funds are not allowed to own more than 20 percent to 25 percent of the portfolio in one company. This was the reason for the creation of capped indices by the JSE, but the local selling pressure on Naspers was not resolved by those new indices.
“Although the listing of Prosus will also not fully resolve the issue, Naspers shareholders will be in a better position compared to leaving things as they have been,” Takaendesa said.
Naspers closed 1.03 percent lower on Monday at R3 528.34.