Top JSE-listed companies are returning more cash than before to shareholders, with groups resorting to the oldest trick in high-finance books to prop up shares that are trading at sizeable discounts to their intrinsic value: share buybacks.
Some of the biggest names on the domestic bourse have also paid generous dividends, using the full set of tools available in the capital allocation tool set.
With SA corporates holding excess cash, unable to find profitable investment opportunities, many are resorting to share repurchases — a more tax-efficient method of rewarding shareholders.
SA gave share repurchasing the green light in 1999.
Naspers has been an outlier, pursuing an aggressive, unprecedented open-ended share-purchase programme, and clinching some of its largest merger and acquisitions (M&A) deals in its illustrious history.
Naspers and Prosus announced an open-ended share repurchase programme in 2022 that has helped the groups close the significant discount to their intrinsic value.
The repurchase programme has returned more than $38bn to shareholders by end-May, which increases to nearly $50bn including the repurchases since 2020.
The results speak for themselves.
Combined, the repurchase programmes have achieved a 15% net asset value (NAV) accretion per share for Prosus and 18% for Naspers, while 33% of Prosus’s free float and 36% of Naspers’s free float have been repurchased.
However, the group’s NAV discount widened by five percentage points in the 2025 financial year, increasing from 37% to 42% over the year — reflecting a deterioration in the discount.
The expenditure on share repurchases did not stop Naspers and Prosus, led by CEO Fabricio Bloisi, from pursuing big M&A items.
The company completed the purchase of Latin American online travel agency Despegar for $1.7bn in May, taking total M&A spending under Bloisi to about $6bn since he took office just more than a year ago.
Bloisi has been given the herculean task of doubling the group’s market capitalisation to $168bn by 2028 — dangling a $100m “moonshot” award for him should he meet this lofty target, which if achieved would make the group bigger than the present market cap of SoftBank, PayPal, Shopify or Airbnb.
The group’s share buybacks and push to double its market value are seen as defensive strategies to prevent hostile takeovers or dilution of control by outside shareholders.
Naspers has funded the share repurchase process from the sale of 5% of Tencent’s shares, reducing the stake to 23.5% at the end of the 2025 financial year. Tencent remains Naspers’s largest investment.
Portfolio managers at Coronation, Neville Chester and Nicholas Stein, said Naspers’s share repurchases had derived value for shareholders.
“Naspers is up 191% and Prosus up 155% over the last three years versus Tencent [which is] only up 61%. This has resulted in a meaningful contribution to our fund’s return,” they said.
Africa’s largest bank by assets, Standard Bank, has spent about R7bn over the past 18 months buying back its shares.
Standard Bank CFO Arno Daehnke said share repurchases would continue to feature in the bank’s capital management strategy.
“In ... the absence of acquisitive capital deployment, we may well continue to do share buybacks. They may not always be at the volume we have done over the last 18 months,” he said.
The bank, with R3.4-trillion in assets, has also not been shy in paying out generous dividends, having returned more than R50bn to shareholders since the 2022 financial year.
Nedbank announced in 2023 a R5bn share-repurchase programme, which coincided with its highest dividend payment yet.
Investec outlined plans in May to buy back its shares to the tune of R2.5bn over the next 12 months. The Anglo-SA group’s most recent share purchase and buyback programme was launched at end-2022 and lasted 18 months at a cost of R7bn.
Absa said in April it was to buy back its preference shares.
The likes of African Rainbow Minerals, Glencore, British American Tobacco, Momentum and AB InBev have also embarked on huge share repurchase transactions.
Coronation said it was pleased that more than half of its Top 20 Fund is made up of companies implementing share buybacks.
“If one looks at the failures and successes on the JSE, ultimately, most of them come down to decisions made by boards regarding capital allocation,” Chester and Stein said.
“The benefit of a share buyback is that the risk is always substantially lower than any new greenfield expansion because you are investing into a business you know and understand well.
“Signing off on mega projects, which always look good on spreadsheets, but in reality end up being poor decisions that earn returns well below the cost of capital, have caused immense damage,” they said.
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