The discount that Prosus and Naspers trade at relative to the value of their investments has narrowed since the groups started buying back their own shares. So, what’s next?
Last Thursday was a knockout day for Naspers and Prosus on the JSE, with shares in both companies rallying by more than 5%.
While there was news last week that had the potential to move their share prices, it’s unlikely that it did. Instead, as usual, they took their direction from Tencent, the Chinese internet and gaming giant that makes up the biggest part of their combined value. Tencent rose by more than 7% on Thursday.
It’s a dilemma that the companies have been trying to resolve in order to narrow the discount that their shares trade at relative to the value of their portfolio of assets, the largest of which remains the 31% stake in Tencent, which is housed in Prosus.
When the discount didn’t narrow materially with the 2019 listing of Naspers’s global consumer internet assets on Euronext Amsterdam, Prosus embarked on a $5-billion share buyback programme last November with the aim of repurchasing up to $1.37-billion of its own shares and up to $3.63-billion of Naspers shares.