Ma Huateng, the chief executive officer of Tencent.
  • The global investment group Prosus is selling $14.6 billion of Tencent stock.
  • The deal will increase Prosus's cash reserves from $4.6 billion to roughly $19.2 billion.
  • Tencent's American ADR has fallen roughly 20% from February 12 highs of nearly $100 per share.
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Tencent's American ADR sank as much as 9.7% on Wednesday after the firm's largest shareholder, Prosus, said it plans to sell $14.6 billion worth of its stake in the Chinese multinational technology conglomerate.

Tencent's Hong Kong shares fell 3.75% on the day.

Prosus, the international internet assets division of the South Africa's Naspers, will remain Tencent's largest shareholder holding some 28.9% of the company.

Prosus also said it will not sell any more Tencent shares for at least the next three years.

Naspers paid $34 million for a 46.5% stake in Tencent in 2001, three years before the company went public in Hong Kong in June 2004. The acquisition was one of the most lucrative venture capital deals of all time netting Naspers billions.

Before the latest sale, Naspers, through Prosus, owned a 30.9% stake in Tencent.

The deal is set to increase Prosus' cash reserves from $4.6 billion to roughly $19.2 billion.

Tencent is the world's largest videogame company by revenue and operates the popular WeChat app. The company outperformed in 2020 amid an increased stay-at-home audience for its games and apps during the pandemic.

Tencent's stock has made huge strides over the past few years due in large part to its lucrative investments in tech firms like Snapchat, the Chinese e-commerce company Pinduoduo, and the delivery and shopping platform Meituan.

The company's ADR, which trades on OTC markets, reached highs of nearly $100 per share on February 12-giving the company a valuation of over $900 billion-but has fallen roughly 20% in the past few months.

Share prices were hurt by investors' fears of China's recent crackdown on big tech names. After Wednesday's fall, Tencent has lost over $150 billion in market cap from its record highs.

Shares of the company's ADR was last trading down 7.6%.

Prosus fell 4% on Wednesday and Naspers gave up 5% on the JSE. 

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