Tencent's main shareholder Prosus nets $15 billion from record stock sale

Hong Kong(CNN Business) Tencent's biggest shareholder has sold $14.7 billion worth of shares in the Chinese social media and gaming giant, and will use the money to invest in other growth ventures.

Prosus (PROSY), a spin-off by South African media and internet investment firm Naspers (NAPRF), sold a 2% stake in Tencent (TCEHY) for 114.2 billion Hong Kong dollars ($14.7 billion), the Chinese tech giant said in a Hong Kong Stock Exchange filing on Thursday. Tencent, which reported a strong financial year during the pandemic, is by far Nasper's most successful investment.

The deal is the biggest block trade ever, according to data provider Refinitiv. Block trades are typically arranged directly between big institutional investors rather than on public stock exchanges.

Tencent's stock dropped 1.5% on Thursday in Hong Kong after the news. It has gained about 80% since Prosus was listed on the Amsterdam stock exchange in 2019.

After completion of the deal, Prosus will remain Tencent's single largest shareholder, with 28.9%. But it will lose its controlling shareholder status, which under Hong Kong listing rules is granted to investors who hold at least 30% of voting rights.

Prosus parent Naspers paid $32 million back in 2001 for a 46.5% stake in Tencent. Its remaining stake is now worth $221 billion. It's a return that is rivaled only by SoftBank's (SFTBF) $20 million punt on Alibaba (BABA) in 2000.

The deal will give a significant boost to Prosus' cash reserves. The Amsterdam-based investment firm reported a net cash position of $4.3 billion late last year.

"Prosus intends to use the proceeds of the sale to increase its financial flexibility to invest in growth, plus for general corporate purposes," Prosus said in a statement.

It also promised not to sell any further Tencent shares for at least the next three years.

Tencent last month posted a huge jump in profit for the fourth quarter of 2020, beating estimates. But the results were overshadowed by concerns of a growing government crackdown on Chinese tech companies.

Prosus, which mainly invests in consumer internet companies, said last November that its businesses have benefited from growth trends in that space, as the pandemic has accelerated digital transformation.

"The focus now is on growing the business and improving financial flexibility and giving ourselves the room to be able to deploy across multiple capital allocation opportunities," Basil Sgourdos, financial director and executive director of Naspers, said in an earnings call in November.