Tencent's Biggest Stockholder Sells Its Shares To The Surprise Of Market Players

Tencent's largest stakeholder will sell a portion of its interest in the social media and gaming conglomerate, barely over a year after committing not to sell the stock for three years.

Photo Insert: The Tencent headquarters

Prosus, a spin-off of South African media and internet investment group Naspers, announced Monday that it will sell a large portion of its holding in Tencent to fund a share repurchase program, according to Laura He for CNN Business.

Following the news, Tencent (TME) shares fell more than 4% in Hong Kong on Tuesday. Prosus (PROSY) and Naspers (NAPRF) stocks jumped 16% and 23%, respectively, in Amsterdam and Johannesburg on Monday.

Prosus, based in Amsterdam, is Tencent's largest stakeholder, holding a 28.8 percent stake worth over $128 billion. The headquarters of Tencent are located in Shenzhen, Guangdong province, China.

It is not the first time in recent years that Prosus has sold Tencent shares. Prosus sold a 2% stake in Tencent for $14.7 billion last April, the largest block sale ever at the time. (Block deals are often conducted directly between large institutional investors rather than through public stock exchanges).

At the time, Prosus agreed not to sell any further Tencent shares for at least the following three years.

Tencent stock has lost 40% of its value since then, dragged down by China's digital crackdown and a faltering economy. The crash reduced its market capitalization by $295 billion.

Prosus said on Monday that the profits from the open-ended stock sale would be used to repurchase its own shares as well as Naspers'.

"It will also shift our asset base toward our rapidly developing non-Tencent assets," Prosus and Naspers CEO Bob van Dijk said in a statement. The business disclosed that it would begin selling limited numbers of Tencent shares on a regular and orderly basis, but did not specify how many.

Rencent stated on Monday that the Prosus sale will only account for a small portion of the stock's regular daily trading volume.

WEEKLY FEATURE : MVP Group Keeps Lights On During Pandemic