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Prosus (PRX NA - US$76 billion) is an Amsterdam-listed investment holding company with a 25.2% stake in Chinese Internet company Tencent (700 HK - US$337 billion).
Its parent company, Naspers, began as a newspaper publisher in 1915 and then became a book publisher. In the 1980s, a young Naspers executive named Koos Bekker formed a pay-TV business that became a major success. In 1997, he began investing in Internet-related businesses, including the 2001 deal to acquire 33% of Tencent for just US$34 million.
Fast-forward 20 years, and Tencent has become one of the most successful growth stories ever. The value of that initial 33% stake (later upped to 50%) has gone up over 3,000x.
Tencent is an incredible company. It controls the WeChat messaging platform and has interests in social media, e-commerce, games, online streaming services, payments, and more. Tencent’s founder and CEO, Ma Huateng, is known for being savvy and has always had a cordial relationship with the government.
To what extent is Naspers simply a “clown that fell into a gold mine”? In other words, can the success of the Tencent investment be repeated?
In 2014, Koos Bekker resigned from Naspers, and a Dutch former McKinsey consultant named Bob van Dijk took over. Shareholders protested against van Dijk and his management team's empire-building tendencies. In a desperate attempt to close the NAV discount, Naspers spun off its Internet assets into a separate company called Prosus and relisted them in Amsterdam. But the NAV discount persisted.
I thought the NAV discount would never go away. But since 2022, there’s finally been some green shoots emerging. Prosus has begun a share buyback program funded by selling its stake in Tencent. Whenever the NAV discount becomes too large, it will aggressively buy back Prosus shares.
In 2023, Bob van Dijk resigned—or, more likely, was fired by Koos Bekker. The new interim CEO is a young former Goldman Sachs and SoftBank executive named Ervin Tu. Judging from his public appearances, he seems laser-focused on improving shareholder value.
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