Tencent’s largest shareholder is shedding its stakes in the company to fund the expansion of its own online businesses and increase financial flexibility as its ventures recently have seen immense growth despite the Covid-19 pandemic.
“The proceeds of the sale will increase our financial flexibility, enabling us to invest in the significant growth potential we see across the group, as well as our own stock,” CEO Bob van Dijk said in a company statement.
“The Covid-19 pandemic has accelerated digital transformation across the group’s growth sectors, mainly online classifieds, food delivery, payments and fintech, education and e-commerce,” he said.
Prosus, majority-owned by Naspers of South Africa, will sell up to 191.89 million shares in Tencent through its subsidiary, MIH TC Holdings reducing its stake at the tech giant from 30.9% to 28.9%.
The company, however, committed not to sell any further Tencent shares for at least the next three years, in line with its long-term belief in the potential of the business.
The portion of Tencent shares of Prosus will be offered to institutional investors globally, with books expected to close prior to the scheduled Hong Kong opening.
The Amsterdam-listed global investment firm set the price range for shares at HK$575.00 to HK$595.00, a discount to the last trading price of HK$629.50.
Bloomberg reports that the recent fundraising will give Prosus another shot at securing a new mega deal after missing out on two high-profile takeovers in the past two years which included buying U.K. food group Just Eat Plc to Takeaway.com at the start of last year, and the $9 billion auction for EBay Inc.’s classifieds business by Norwegian rival Adevinta ASA in July.
As a result of the announcement, Tencent shares dropped 3.8 percent to HK$629.50 on Wednesday. Prosus shares also traded 4.1% lower as of noon-time market trading in Amsterdam.