In biggest VC gain, Naspers sells 2% in Tencent for $11bn

South African media company

Naspers

is cashing in a sliver of one of the greatest venture-capital investments ever.

The Cape Town-based company is selling $10.6 billion of shares in

Tencent

Holdings, equal to 2% of the stock in the Chinese operator of the WeChat messaging service, it said in a statement on Thursday. The stake Naspers bought for just $32 million in 2001 — when Tencent was an obscure web firm in a nation where few people used the internet — is now worth $175 billion.

The sale comes hours after Tencent, Asia’s most valuable company, warned it will sacrifice short-term margins, spending on content and technology in pursuit of growth. While the forecast led to a 5% slump in Tencent’s stock, Naspers said it still considers the company “to be one of the very best growth enterprises in any industry in the world, managed by an exceptionally able team”.

Naspers might have remained a little-known publisher of South African newspapers and operator of pay-TV services if not for the decision to invest in Tencent. While the investment has made Naspers the most valuable company in Africa, its market capitalisation of about $122 billion lags well behind the value of the

Tencent Holding

, suggesting investors assign no value to its other businesses.

Naspers’s quandary is similar to those faced by other companies that made hugely successful investments in technology startups. “By doing this, Naspers will be able to reduce its borrowings, grow its own portfolio and slowly start reducing that underlying discount,” said money manager

Ron Klipin

at Cratos Capital