For years, Prosus was a single-stock story — Tencent at a discount. Now, after a parade of listings, buybacks and a fresh coat of “AI-powered e-commerce”, it is pounding the table with the message that it is more than a glorified wrapper for its Tencent stake.
Prosus is the JSE answer to a Russian nesting doll. Open it up, you’ll find another holding company, and inside that another, and somewhere deep within a golden ticket labelled “Tencent”.
The company’s journey from a parochial South African publisher to a global tech investor is the stuff of legend. The 2001 investment in Tencent — $32m for a stake now worth nearly R2.7-trillion — was a once-in-a-century bet.
As Tencent ballooned, it became both a blessing and a curse. The more Tencent grew, the more Prosus’ own operations faded into irrelevance. The financial inefficiency prompted company leaders to release value trapped in the structure. First with the Prosus listing in Amsterdam, then with a convoluted cross-holdings and finally with open-ended buybacks. Each move, intended to narrow the discount, seemed only to deepen it, except for the share repurchase programme.
The buyback programme, funded by the orderly sale of Tencent shares, has returned more than $50bn to shareholders, resulting in a value uplift of about 20%. The idea behind the open-ended buybacks is that at some point, the more Tencent is sold, the less Naspers is a Tencent proxy, and the more investors must believe in the e-commerce story.
And the numbers are starting to back up the logic and bravado that Prosus is more than Tencent. Since late November, Prosus’ net asset value sits at $203bn, with Tencent accounting for $164bn of that pile. The rest — Latin America, Europe, India and others — adds up to about $44bn. Net debt is a modest $4.8bn and the group has $11.5bn in cash. The punchline is that Prosus’ market cap is about $143bn, implying a 30% discount to the sum of its parts.
That is still a chasm, to be sure, but it is half what the company’s discount to its underlying assets was just a few years ago. Still, Prosus is valued as if its non-Tencent assets are a rounding error or, worse, a liability.
In all fairness, Prosus’ e-commerce portfolio is no longer a graveyard for cash. The portfolio — spanning iFood, PayU, OLX, Swiggy, Delivery Hero, and now Despegar and Just Eat Takeaway — has swung from chronic loss-maker to adjusted earnings before interest and taxes of more than $440m in the latest financial year, a 12-fold improvement over the previous year. Free cash flow is positive even excluding Tencent’s dividend. The group is on track for $1.1bn in adjusted earnings before interest, taxes, depreciation and amotisation in the 2026 financial year.
And Prosus is betting the farm on AI. The group has deployed thousands of AI agencies across its operations, built an AI lab in Europe and is embedding AI into everything from logistics to customer support. The result is lower delivery, reacquisition and support costs.
Even so, the market isn’t buying the Prosus turnaround story, at least not at full price. The discount to net asset value at 30% traps more than $60bn in shareholder value in the structure. That is not insignificant. Diversified holdings companies trade at discounts of between 8% and 20%, which is exhibit A that Prosus’ discount is outside of the unacceptable end of the range.
As McKinsey makes clear, conglomerate discounts persist when investors lack transparency, doubt management gets capital discipline or see limited synergies between portfolio assets.
Prosus has come a long way from being Tencent with baggage. It has earned the right to say it more than Tencent, even though it is priced like a garage sale where there’s valuable stuff inside, but no-one wants to pay the full retail price for the box.
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