Naspers-Prosus share swop delays opening of JSE
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THE START of trading on the JSE was delayed by hours today following the completion of the share-swop deal between tech giant Naspers and its subsidiary Prosus.
Trading was due to start at 9am, but by 12pm the JSE said that the opening would be delayed further, and it would update clients an hour later.
The “corporate action” by the JSE’s largest company by market capitalisation resulted in a record number of transactions in a single day yesterday, taking the FTSE/JSE All Share Index to an unprecedented 69 939 points.
Anchor Capital’s Mark Gretsy said the transactions yesterday set a new record.
“I understand that it is related in some way to the massive trade that took place yesterday as a result of the index changes. I believe it was a new record from a trading perspective on the JSE,” Gretsy said.
“However, I am not sure specifically why this should cause the JSE to be unable to trade today, and no one I have spoken to has been able to give me an answer to that.”
The JSE said an unprecedented number of transactions from the previous trading session had to be captured as the system struggled to cope with more than R145 billion in transactions from the Naspers-Prosus deal.
Naspers, the JSE’s largest company by market capitalisation, reduced its weighting in the Top 40 Index, the Indi25 and other indices to rebalance its oversized weighting on the local bourse.
In terms of the share-swop deal, Prosus bought 45 percent of Naspers’s ordinary shares, bringing its ownership in Naspers to 49 percent.
Naspers owns about 57 percent of Prosus and will keep voting control.
The two companies share a single board.
Prosus has an economic interest of about 60 percent of the companies’ international assets, including billions of rands worth of shares in Chinese internet giant Tencent.
Kruger International portfolio manager Mia Kruger said: “The main reason for these large volumes of R145bn traded in one day is due to the Naspers-Prosus corporate action.
“Shareholders in these companies could elect to exchange Naspers shares for Prosus shares, which in effect decreases the amount of Naspers shares and increases the Prosus shares available for trading on the JSE.”
Kruger said the share-swop deal would increase the free-float of Prosus shares and help to have its shares included in more indices on the Amsterdam Stock Exchange, where Prosus has its main listing, also boosting its global liquidity.
BUSINESS REPORT ONLINE