25 June 2019

South Africa: Fund Managers Concerned About Unintended Consequences of Naspers Amsterdam Listing

analysis

Naspers is planning to list its international businesses on Euronext Amsterdam in the next few months, but the listing could have a perverse effect on local and foreign fund indexes. One of the claimed advantages is that the unbundling will decrease the way the tech company dominates the JSE's indexes, but fund managers are concerned the effect could, in fact, be the opposite.

Call it the curse of unintended consequences. When Naspers lists on the Amsterdam exchange in the next few months, SA tracker funds could under some circumstances end up being obliged to buy more shares. This is precisely the opposite of what was intended.

How this comes about is a bit technical. The enormous growth Naspers, which is now larger in market capitalisation than Anglo, Sasol, Standard Bank, MTN and Vodacom combined, has meant that the company dominates the Johannesburg Stock Exchange.

Hence, listing a new company, to be called Prosus, which will be 75% owned by Naspers, and which will hold all the company's international assets, you would think would reduce its weighting on the JSE. That was certainly the intention of Naspers itself, which has been struggling to emerge from the shadow of its Chinese investment...

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