January 26, 2020 Real Estate Publication

A $100 billion tech company you’ve never heard of just listed in Europe

Bob van Dijk, chief executive officer of Naspers Ltd.

Bloomberg | Bloomberg | Getty Images

Europe has lamented its lack of big internet technology companies capable of competing with U.S. and Chinese giants like Google, Facebook, Alibaba and Tencent.

Overnight, the continent’s fortunes changed in the form of a $100 billion consumer internet company that listed publicly Wednesday in Amsterdam.

The company is called Prosus, and it’s a spinoff of South African consumer internet conglomerate Naspers. Prosus said its market capitalization on its first day of trading is roughly $100 billion, making it one of the 10 biggest consumer internet groups in the world.

“The listing of Prosus is an exciting step forwards for the group, giving global technology investors direct access to our unique and attractive portfolio of international consumer internet businesses,” Naspers and Prosus Group CEO Bob van Dijk said in a press release Wednesday.

Prosus is not a consumer internet business itself, meaning it doesn’t offer digital services under its own brand like Facebook or Alibaba, for example. Instead, it invests in a portfolio of global internet firms in sectors ranging from payments and fintech (financial technology) to food delivery.

The group’s best-known investment is a 31% stake in Chinese tech giant Tencent, a gaming titan and owner of the hugely popular messaging app WeChat. Naspers made a $32 million investment in Tencent in 2001, a bet now worth $130 billion.

Under the new structure, Prosus will hold Nasper’s Tencent stake, as well as positions in other firms like Russian social media company Mail.ru Group and German food delivery service Delivery Hero. Naspers will remain a majority owner of the new company.

Europe playing catch-up

The addition of Prosus to the Amsterdam exchange shakes up Europe’s tech landscape, with the company instantly becoming one of the biggest tech entities in the region. According to data compiled by Reuters, it is only outmatched in size by German software firm SAP, which is valued at roughly $135 billion.

Europe has lagged behind the U.S. and China as a home for big tech companies. Of the 20 biggest internet companies by value in 2018, none were headquartered in Europe, according to data from the World Economic Forum. Last month, reports emerged that the EU had drafted a plan for a sovereign wealth fund to invest in “high-potential European companies” that could compete with U.S. and Chinese big tech firms.

“Naspers believes that the choice of Euronext Amsterdam is, and will be, beneficial to the company as Euronext markets are some of the largest, most integrated and proven capital markets in Europe,” the company said in its prospectus.

Naspers first announced its intention to list its international internet assets under a new company name, now Prosus, on the Amsterdam exchange in March. Prosus also has a secondary listing on the Johannesburg Stock Exchange. Analysts said one reason behind the decision was that Naspers had an outsize weighting on the Johannesburg exchange.

By listing directly on the Amsterdam exchange, the Prosus listing has not received as much attention as a traditional IPO, according to Ken Rumph, an equity research analyst at Jefferies who covers Naspers. As part of the listing, existing Naspers shareholders will be issued new Prosus shares.

“Being listed in Europe, there’s a bigger investment pool, lots of kind of passive money and indexes that you could be part of,” Rumph said in an interview Tuesday. “There’s a sort of tactical argument that this is a more favorable venue.”

Prosus will trade under the ticker symbol “PRX.”

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