From Breakingviews - SoftBank-Alibaba sale looks awkward for Prosus
stock equivalent to about 1% of Tencent’s total share count into the Hong Kong Central Clearing and Settlement System, usually a precursor to selling. But a person familiar with the situation told Breakingviews that it was just an administrative move and that the gradual pace of the selldown was unchanged.
That’s a shame for van Dijk and Prosus’s investors, who are sitting on a portfolio of assets that trade well below their theoretical value. Granted, the Amsterdam-listed group doesn’t face the same pressures as Son’s SoftBank, whose investments have been smashed as its leverage levels have been creeping upwards. Alibaba’s recently announcedcould also offer Son the chance to sell the rest of his holding at a higher price.
But that doesn’t mean the status quo makes much sense. Prosus’s discount to its paper value is about 40%, using Wednesday’s closing prices. That’s down from its peak last year, when the share price was considerably less than half the company’s net asset value per share. But the current level still implies that shareholders could be about two-thirds better off if van Dijk broke the company up and sold it off for scrap, before factoring in tax.
SoftBank and Prosus are not alike. But for their Chinese web investments, the right answer is in both cases to head for the exit door.
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