South African telecom company Naspers said in a statement Wednesday that its tech arm had sold up to 2% of Chinese internet giant Tencent for $14.7 billion, cutting its stake in China’s most valuable tech firm to 28.9%.

Why it matters: Naspers’s block sale repeats a March 2018 trade in which Tencent’s biggest shareholder sold 2% of the world’s largest gaming company for $9.8 billion. Tencent’s stock fell by nearly 50% over the following six months.

Details: Prosus, the Dutch-listed international arm of Naspers that holds Tencent shares, said Wednesday that it had sold 191.89 million Tencent shares for HKD 114.1 billion (around $14.7 billion), reducing its stake to 28.9%.

  • Prosus remains Tencent’s largest shareholder.
  • Those shares were sold at the price of HKD 595 each, slightly lower than Tencent’s Wednesday close price of HKD 629.5. 
  • Tencent shares dropped by more than 2% on Wednesday morning following the announcement.
  • Prosus said cash from the sale will “increase its financial flexibility to invest in growth.” The trade is “understood and supported by Tencent”, said Prosus.
  • The firm also promised not to sell more of the company’s shares for three years.

Context: Tencent said last month that its profit for the fourth quarter of 2020 rose 175% year on year to RMB 59.3 billion (around $9.1 billion). The company’s revenue for the fourth quarter rose 26% year on year to RMB 133.67 billion.

  • Shares of Tencent reached a historical high in January, but then started to fall as China began to tighten regulations on tech companies.

Writing about semiconductors and telecommunications.