Pony Ma lauds Naspers as rare shareholder after $10bn sale
Nasper is sitting on a return of 4,000 times on its investment in Tencent
What do you call a shareholder who only cashed out once over 20 years?
A rare shareholder, according to China’s richest man Pony Ma.
Speaking at the IT Leader Forum on Sunday, the chairman of Tencent said, “Our South African shareholder held our shares for 17 years until selling a few of their shares a few days ago.
“But they promised not to sell in the next three years – this kind of shareholder is rare.”
Of course, “a few of their shares” was an understatement. Tencent recorded its largest trading day last Friday after its major shareholder Naspers cashed out for the first time since 2001 – recouping about US$10 billion for about 2% of its holding.
Naspers bought a 32% stake in Tencent in 2001 from IDG and PCCW for $33 million, or an average of less than 10 cents a share.
Based on Tencent’s price of HK$420 (US$53.5) on Friday, Nasper is sitting on a return of 4,000 times on its investment.
Naspers’ entire stake in the Chinese internet giant is now worth US$167 billion.
Naspers has gone from a humble gaming company to one of the five biggest technology firms in the world. It showed incredible patience by holding on to Tencent shares since its 2004 listing, and now promising not to sell any further shares for another three years.
Naspers faced enormous pressure from shareholders, who wanted the company to cash out from its huge stake, which was 40% more than its own market value. In fact, investors assigned no value to Naspers’ other assets such as newspapers, pay-TV services and other technology investments.
Naspers sat on this once-in-a-lifetime investment in Tencent, just like Yahoo! and Softbank in their investments in Alibaba Group, which have also reaped an investment return of over thousand times what they outlaid.
Thanks to the internet age, some investors are able to cash out much faster than Warren Buffett, an investment guru known for his buy-and-hold approach which has seen him accumulate huge investment returns.
Last week tycoon Li Ka-shing said in his farewell speech that people holding shares in his firm CK Asset (formerly Cheung Kong Holdings) would have made a return of 1,500 times their initial investment if they held on to their shares since 1972, and 5,000 times if they reinvested their dividends – just like him.
But Pony Ma and his loyal shareholders seem have to achieved a return of 5,000 times in Tencent in only one-third of the investment period.