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Comment by wpaladin | Hacker News Reader

I hadn't heard of Prosus or Naspers before this. Apparently Naspers owns 31.2% of Tencent. Time to revisit my assumptions with respect to how companies are owned.

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Reminds me of "Tencent owns reddit" threads on reddit then someone points out that Naspers owns Tencent. Hilarity ensures.

Tencent also owns almost half of Epic.

Which was extra funny given Tencent's tiny ownership share in reddit.

In the business world it doesn't take much to exert a big influence on a company.

Indeed. https://en.wikipedia.org/wiki/Naspers is a fascinating read.

Naspers' market cap is 98B, yet they own 31% of Tencent which is worth 775B - am I missing something? I'm aware of conglomerate discounts but I suspect there's something else going on here.

>In 2001, Naspers made an early, successful investment of US$32 million, in Tencent. As of 2018, Naspers had approximately a 31 percent stake in Tencent, becoming its largest shareholder

https://en.wikipedia.org/wiki/Naspers

its probably because of their early investment in Tencent.

The issue OP is bringing up is how their market cap is so small. 18% of $775B is more than $100B. It also means everything else they own is worth negative technically.

The same was true of Yahoo in its last days as an independent company. Their holdings in Alibaba and Yahoo Japan (an independent, successful company) were worth more than Yahoo's market cap.

Selling Yahoo to Verizon meant splitting the web properties out from the company, leaving it as a shell for its holdings.

Most of what I read previously about this has to do with a lot of uncertainty about how the Nasper's stake in Tencent will eventually be taxed or how the value will be extracted, and a lot of uncertainty about South African business in general.

Note that Prosus, which is a subsidiary almost completely owned by Nasper (they have a small amount of public float), is worth close to $180 billion, which is much closer to the Tencent holding value. This reflects that people are much more confident of Dutch business than of South African business, and there probably is every right to be.

They are trying things. I read an article recently where they’re going to try lowering Naspers impact in South Africa as such a giant part of the market and other lower valuation issues for both companies by exchanging or buying one anothers shares so both companies will own sizeable portions of each other. Versus right now it only goes one way.

If you read up a bit on Naspers and Prosus. They have been trying to solve the discount problem. That’s the reason for Prosus being listed in Europe. Naspers is too big for South Africa’s stock market. It still is a bit too big.

Share buy backs and one or two other strategies are their next options along with the recent sale of some of Tencent to diversify. Like one strategy is for the two companies to exchange their stocks to own one another more. Own one another more.

SoftBank has a similar massive discount. I believe SoftBank is worth around as much as their Alibaba stake. While they also have stakes in T-Mobile US of around 8% (Tmobile market cap is $175B so that’s $14B) and 50% of Z Holdings (Yahoo Japan + LINE) which has a $30B market cap

One caveat to the T-Mobile stake is that U believe Deutsche Telekom is currently and can in the future buy back a considerable amount of Softbank’s shares. Perhaps at a discount. Nonetheless their stake is still going to be very sizeable.

So SoftBank is like Naspers and Prosus in that their market values and claim to fame and money rested on one moonshot. Now their valuations are awful.

SoftBank of course has other issues possibly with the founder and CEO and their vision fund but it was undervalued even five years ago.

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Another issue is what is the final value of those stakes. How would they get taxed etc. It is rare for big companies to have the majority (or even say 50%) of their value come from a stake in an unrelated company. I don’t think there are any other examples of this.

For related stakes. I think Deutsche Telekom is not worth much more than their T-Mobile US stake and they do more than just that.

>Time to revisit my assumptions with respect to how companies are owned.

And what would those be? I'm curious

Possibly how weird it is to think of the ownership of ownerships and stakes. Nested

Say there is a large [activist] investor ->

who owns 5% of Naspers ->

which has a sizeable stake in Prosus ->

which has a sizeable stake in Tencent ->

which has a sizeable stake in Epic Games (40%+)

a majority stake in Tencent Music ->

which has a respectable stake in Spotify (7.5%). Not to mention Tencent’s own stake in Spotify (1-3%)

Is it advantageous for a company to own some of its competitor's stock?

Does it represent a conflict of interest?

I guess it depends on how much is owned.

A percent or two would be very different to 30-40% (which would probably be a controlling interest).

Spotify and Tencent Music swapped shares when they did a deal together.

There is some hand wringing with all the gaming companies Tencent owns or has a stake in. They own Supercell which was worth $10B+ before. League of Legends parent Riot. A stake in Kakao Daum that does gaming stuff too.

On top of the 40% of Fortnite parent Epic Games, they own 10 or 15% of PUBG parent Bluehole. They own 5%+ stakes in Ubisoft and Activision Blizzard (which owns Candy Crush parent King Games). They are a huge game publisher in China and okay in rest of Asia. So they get to publish a lot of games like WoW in China.

They own a handful of smaller studios and a stake in probably a dozen other gaming studios at minimum. Usually when I say studios I mean outside China too. Miniclip and Agar.io might be familiar to people. 20% of Glu Mobile too which makes a lot of the branded kitsch apps for Kardashians etc. they just got bought so not sure if ownership remains.

Tencent is the closest successor to Berkshire Hathaway. Their other minority stakes are wild too. Minority stakes each worth billions include JD.com(Amazon of China), Kakao Daum as mentioned, Snap[chat], Tesla, Pinduoduo (China’s top 5 richest is founder of this Chinese ecommerce phenom), previously or maybe still Flipkart, one of the big 3 Ecom in India, Didi, the Uber of China of which Uber merged and has a minority stake, Nio (China’s biggest electric car company for now), Meituan Dianping stake which itself could eclipse a $100B market cap, Vipshop another Chinese company. Don’t forget 5% of Reddit though that’s not worth even half a billion

It totally blew my mind a few years ago to discover that this is also common in the bar & restaurant world.

That would low key blow my mind a bit. I enjoy corporate stuff and stock numbers as an inane thing. Never came across bars and restaurants and their ownerships

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