Naspers intends to list its international internet assets on Euronext Amsterdam with a secondary inward listing on the Johannesburg Stock Exchange (JSE). This new holding will be named Prosus N.V. The transaction is due to take place on 11 September 2019.
This essentially means Naspers as it is now will be split into two companies, Prosus listed in Amsterdam (secondary listing in SA) and Naspers (listed in SA). Prosus will comprise Naspers’ international consumer internet assets, including Tencent, Classifieds, Payments and Food Delivery.
On the Capital Restructure Date, Naspers will hold its South African assets in:
- Media, primarily Media24
- Ecommerce, primarily, Takealot, Mr D Food and Property24
- Treasury shares in Naspers that are held for the purposes of certain Naspers Group share schemes
- Investments made by Naspers Foundry, a South Africa-focused start-up funding initiative
The new Naspers will also hold between 73.00% and 83.00% of Prosus (the exact amount will depend on the elections made by current Naspers on this capitalisation issue).
Current Naspers shareholders have the option of receiving Prosus Shares or additional Naspers shares.
Thus, after the capitalisation issue current Naspers shareholders will, depending on their selection, be invested in either:
- a newly formulated Naspers and Prosus
- the newly capitalised Naspers
The default option is for shareholders to receive Prosus shares, i.e. if you don’t make an election this is what will be provided. Read the full prospectus here.
Shareholders taking the Prosus shares will incur a capital gains tax on implication. This means that tax needs to be paid now that would otherwise have been payable at a later stage, such as when selling Naspers shares in the future (i.e., there is an acceleration of tax but not a double tax).
For this reason, South African tax resident individuals may prefer not to receive Prosus shares but can instead decide to take additional Naspers shares.
What Emperor is Electing
At Emperor, we are going to elect to take the Prosus shares. Although this will cause a capital gains tax event, we believe the value of Naspers is gained more in its international holdings than in its local portfolio of companies. We believe that the value accrued from the international listing will more than offset the capital gains that we will incur.
We prefer to gain direct exposure to the international holdings rather than gain indirect exposure through Naspers holdings in Prosus.
The above is Emperor’s view, it should not be construed as advice and may not be suitable for all investors particularly for those investors who may have a large capital gains event.