Advertisement
Tencent
BusinessBanking & Finance

Here’s how Naspers’ bankers executed the world’s largest block sale of Tencent shares without crashing Hong Kong’s market

  • Naspers sale of a 2 per cent stake in Tencent marks world’s largest ever overnight sale of a block of shares and attracted US$60 billion worth of orders
  • Deal priced at tighter discount than Naspers’ 2018 Tencent sale, despite China’s antitrust crackdown and Archegos Capital implosion

Reading Time:7 minutes
Why you can trust SCMP
Illustration: Brian Wang/SCMP
Alison Tudor-Ackroyd

A sleepless, white-knuckled night awaited bankers at Goldman Sachs, Morgan Stanley and Citigroup on April 7 after the Hong Kong stock market closed, as they checked in with colleagues half a world away on Zoom Video Communications’ conferencing software.

Advertisement
Over the next six-and-half hours late into the night, the Hong Kong-based bankers worked frantically with dealers in New York, Tokyo, London and San Francisco to match buy and sell orders in the world’s largest-ever block trade at HK$114.17 billion (US$14.7 billion). On offer was 2 per cent of China’s most valuable company, Tencent Holdings.

The seller, Naspers of South Africa, was cashing in on one of the most successful venture capital investments of all time to finance its forays into other digital businesses. At its sale price, the Cape Town-based company had notched up a return of over 7,000 times on its investment, based on calculations by South China Morning Post.

Finding buyers for the block, about nine times more than the average daily traded volume over the past 12 months, was no mean feat because a clumsy exit from the heaviest weighted stock on the Hang Seng Index would potentially set off a calamitous crash not just in Tencent’s shares, but also for the world’s third-largest capital market. Coming hot on the heels of fire sales in technology stocks in the wake of Archegos Capital’s implosion and heightened antitrust scrutiny in China, the timing made it one of the most challenging deals to pull off in the history of finance.
Tencent’s share price from 2018 to 2021
Tencent’s share price from 2018 to 2021

To help clinch the deal, Naspers secretly briefed a small group of money managers 24 hours before the divestment. All in, US$60 billion worth of orders were queued up for the Tencent block that night including about 10 for around US$1 billion each, according to people familiar with the matter.

Advertisement

Tencent’s shares, which closed at HK$629.50 before Naspers’ Prosus unit announced its sale, never fell below HK$600 in the days since, keeping buyers well in the money above their HK$595 purchase price. The successful sale also underscored the depth and abundance of liquidity in Hong Kong’s capital pool, enough to rival US and European markets.

Advertisement