The oldest and largest investor of the Chinese tech giant Tencent Ltd. (OTC: TCEHY), Naspers Ltd., is planning to sell more than $10 billion worth of shares of this Chinese tech giant, Wall Street Journal reported.
Naspers Ltd., a South African media and internet firm, announced that it is planning to sell 190 million shares, which worth around $10.6 billion based on the closing share price of Tencent, and cutting its stake in Tencent from 33.2% to 31.2%.
According to Wall Street Journal, Naspers trades at a discount to the market value because of a dividend-withholding tax that would kick in should it ever sell out. The tax doesn’t apply to Thursday's share sale because the company isn’t returning proceeds to shareholders. The company’s market value was recently about $115 billion, according to FactSet, accounted for Thursday’s sharp fall.
In 2001, even before Tencent went public, Naspers paid just $34 million for its stake in Tencent, but now the stake worth around $175 billion. Naspers has become the most valuable company in Africa because of its Tencent stake, and its shares fell more than 8% in response to the news.
A spokesperson of Tencent said Tencent has gained Naspers’s commitment to not sell any more shares for several years, that “indicates confidence in our long-term growth and management.” And Naspers is still the major shareholder of Tencent.