Has Prosus finally awakened?

Could Fabricio Bloisi actually pull off the impossible? After his first year as the new CEO, it is becoming more plausible that Prosus may end up as more than just a mountain of Tencent shares. 

Prosus, the international technology arm of Naspers, owns stakes in numerous e-commerce companies which, at one point, seemed at risk of just being a bottomless pit. No longer, it seems. In its most recent set of results, Prosus’s e-commerce companies even generated a (slight) positive cash flow.

This has pushed the company’s share price up 67% in a year, to a record market capitalisation of €120bn.

And yet, there still looks to be room for growth, given that Prosus is still valued at a discount of about 32% relative to the intrinsic value of its assets. Of course, the vast majority of that intrinsic value consists of shares in Tencent, the Chinese gaming and social media giant listed in Hong Kong. 

What that means in real terms is that the value of Prosus’s 23.5% sits at about €143bn today – almost €20bn more than all of Prosus. In other words, the market assigns a negative value to Prosus’s many holdings in young e-commerce companies.

To reduce this discount relative to its intrinsic value, Prosus has been selling Tencent shares for three years and using the proceeds to buy back its own shares. The record price of the Prosus share is therefore not solely a result of the significant increase in the Tencent share price; the share repurchases helped too.

Prosus touts the high value created by this strategy, in which Tencent shares are sold and Prosus’s own shares are bought back while Prosus trades at a significant discount relative to its intrinsic value. For 2025, Prosus claims $35bn of value was created this way – $10bn from an increase in intrinsic value, and $25bn by lowering the share price discount.

The market clearly sees hope in Bloisi’s vigorous approach. 

Creating value by sitting on a mountain of Tencent shares and gradually selling off bits to buy back undervalued Prosus shares is not rocket science. But more important is that, in addition to new investments, its existing holdings in its other e-commerce businesses are also being streamlined, sold or brought to the stock market. Once these other companies in its portfolio begin to yield solid returns, a significant appreciation in Prosus’s stock is likely.

Yet Tencent remains a core holding.

At the Prosus AGM on August 20, European Investors/VEB, which is a Dutch association of investors, asked whether a split of Prosus into a pure e-commerce conglomerate and a separate depository with the Tencent shares would not lead to greater value creation. The reasoning is compelling: not only would a discount on the Tencent share position be easier to eliminate, but Prosus’s dependence on just one company in one country is irresponsible from a risk diversification perspective. 

Furthermore, the VEB argued that the portfolio of e-commerce holdings should, and could, become self-sustaining quicker, with a more rigorous allocation of capital.

But Koos Bekker, chair of Prosus and Naspers, was resolute: Tencent is not just a great-performing investment but also a core holding. The key players in the current e-commerce era are in the US – namely Amazon, Meta/Facebook, Google, and Apple – or in China (where Tencent is dominant), while Europe plays a minor role. 

But while Bekker acknowledged the risks in China, he believes they are no greater than elsewhere.

Protest vote

The AGM itself was an odd affair. After an hour of videos and a passionate presentation by Bloisi, shareholders were given a narrow window to ask questions during the first agenda item. After that, the 18 voting points were shown, and the meeting was adjourned for five minutes for the vote. But then, after the results were announced, Bekker abruptly closed the meting – even though the voting results on remuneration, at the least, merited a public discussion. 

As it was, more than 13% voted against the most important remuneration points. While that sounds small, this was distorted by the fact that the high-voting “A” shares are held by Naspers insiders. Strip out the insider vote, and that amounts to a massive protest vote from the wider shareholder base.

The controversy over Bloisi’s possible “moonshot” bonus – in which he could receive an extra $100m over three years – undoubtedly played a role in the votes against by non-affiliated shareholders. It is now clear that Prosus will apply high bonuses more broadly for exceptional performance, with about 100 people able to collectively earn another $100m. The biggest prize of $11m is being dangled in front of the CFO, while the rest will have to make do with a maximum of a few million.

It’s understandable that Prosus wants to stimulate a pioneering entrepreneurial culture, but the challenge is to avoid excessive risk-seeking and potentially fraudulent behaviour. 

Investors also want to know what Jitse Groen, the CEO of Just Eat Takeaway – which Prosus is set to buy – might be offered. On this point, Prosus said it has no agreements with him, and his financial package is solely between him and Just Eat. But this question will undoubtedly be asked again next year. 

If Bloisi can demonstrate to shareholders at next year’s AGM that Prosus has created large amounts of value from its entire portfolio, rather than just from Tencent, then he will be able to provide a compelling argument.

Errol Keyner is deputy managing director of European Investors/VEB, a Dutch non-profit organisation lobbying for shareholders

_{Top image: Prosus CEO Fabricio Bloisi. Picture: supplied.}