PROSUS: VENTURE CAPITAL CONGLOMERATE IN AN ERA OF PROFITABILITY DISCIPLINE

A Macro Intelligence Memo | June 2030 | Investor Edition

FROM: The 2030 Report DATE: June 15, 2030 RE: Prosus Financial Performance, Portfolio Dynamics, and Investor Returns

SUMMARY: THE BEAR CASE vs. THE BULL CASE

BEAR CASE: - Current Stock Price: €53.50/share (June 2030) - Bear Thesis: Tencent multiple compression continues (Chinese regulatory risk); food delivery operations never achieve profitability; portfolio NAV deteriorates 3-5% annually; discount to NAV widens to 30-35%; activist investors demand breakup; management fails portfolio optimization; cash burn accelerates - Bear Target (2035): €35-42/share (flat to -21% downside) - Downside Scenario Returns: -21% to -2% over 5 years; significant underperformance - Positioning: Reduce exposure; sell on rallies above €58; avoid new positions; consider NAV discount as downside protection limit

BULL CASE: - Management Actions: Successfully executes portfolio optimization; Tencent stake optimized (either maintained at premium valuation or sold/distributed); food delivery achieves profitability breakeven; IPO/spinoff of classifieds platform; Naspers dividend increased; NAV discount narrows to 12-15%; returns €10-15B to shareholders via buybacks and special dividends - Stock Trajectory: €53.50 → €70 (2032) → €90-110 (2035); NAV/share reaches €110-130; discount compressed to 10-15% - Entry Points: Accumulate on weakness below €50/share, especially on Tencent weakness; add on recession weakness to €40-45; maintain core position; increase on portfolio optimization announcements - Bull Case Return: +68-106% by 2035 (11-13% CAGR); NAV discount compression creates additional upside

EXECUTIVE SUMMARY

Prosus, the Amsterdam-listed venture capital conglomerate and Naspers subsidiary, has delivered compounded annual returns of 1.2% to shareholders from 2024 through June 2030, underperforming inflation and the broader market. The company's $87.3 billion portfolio—centered on a 27.2% stake in Tencent, food delivery operations, classifieds platforms, and emerging market fintech—navigated extreme valuation cycles driven by AI enthusiasm (2024-2025), profitability reckoning (2025-2028), and portfolio rebalancing (2028-2030).

The core challenge Prosus has faced is structural: as a public vehicle for private venture capital, it suffers from a persistent 18-24% discount to net asset value, tax inefficiency from concentrated illiquid holdings, and conflicting incentives between the venture capital mandate (high risk, concentrated bets) and public market expectations (diversification, visible cash generation).

By June 2030, Prosus has initiated a strategic shift toward portfolio simplification and capital optimization, divesting underperforming assets and increasing focus on cash-generative properties. The Tencent stake—which represented 65% of NAV in 2024—has declined to 58% of NAV by 2030, reflecting Prosus's deliberate portfolio reweighting.

SECTION ONE: PORTFOLIO COMPOSITION AND EVOLUTION

2024 Portfolio Structure

In January 2024, Prosus's $87.3 billion portfolio comprised:

The portfolio structure reflected Naspers's historical investment thesis: deploy capital across Asian and emerging market tech platforms, maintain long-term strategic stakes, and harvest gains through IPO or strategic exit.

The Tencent Anchor

Tencent represented the crown jewel of the Prosus portfolio. The 27.2% stake was valued at $56.8 billion in January 2024 (based on Tencent's market cap of $208 billion). Tencent's business comprised: - Social media and messaging (WeChat): 93% of Chinese internet users - Online games: $14 billion in annual revenue; 21% of global gaming market - Fintech (WeChat Pay, Tenpay): Processing $2.1 trillion in annual transactions - Cloud and enterprise software: Emerging but growing segment

The Tencent stake was both Prosus's greatest asset and its greatest liability: - Asset: Exposure to one of the world's most profitabletech companies, with $40 billion in annual EBITDA - Liability: Extreme concentration; inability to diversify without triggering Chinese tax law complications; regulatory uncertainty

The Delivery Hero Conundrum

Delivery Hero was Prosus's second-largest holding (9.4% of NAV). Acquired stakes in food delivery platforms across multiple geographies created a global presence: - Brazil: 35% market share (competing with Ifood) - Central Europe: 42% market share (competing with Wolt) - Southeast Asia: 18% market share (competing with Grab, Gojek)

Delivery Hero's business model was structurally challenged: - Unit economics: Food delivery operates at negative unit economics (delivery cost > commission margin) - Path to profitability: Unclear; dependent on consolidation, price increases, and scale - Cash burn: $800M annually (2024) despite $2.1 billion revenue

Delivery Hero had been a persistent drag on Prosus returns throughout the 2018-2024 period. By 2024, investor patience was exhausted.

Prosus's Direct Food Delivery Operations

Prosus directly operated food delivery platforms in Brazil, Poland, Portugal, and several emerging markets. These operations generated: - 2024 revenue: $3.2 billion - 2024 operating loss: -$280 million - Path to profitability: Contingent on consolidation and unit economics improvement

These direct operations were structurally similar to Delivery Hero but had even less potential for profitability, given the fragmented competitive landscape.

Classifieds Platforms

Prosus owned control stakes in several classifieds platforms: - OLX (emerging markets classifieds): $1.8 billion valuation; $180 million revenue; $15 million EBITDA - Lokl (Latin American classifieds): $1.2 billion valuation; $85 million revenue; $5 million EBITDA - Various others: Combined $2.4 billion valuation

These were legacy business units from the pre-digital era. While profitable, they faced secular decline as consumers migrated to social media-based marketplaces (Facebook Marketplace, WhatsApp).

SECTION TWO: VALUATION CYCLES AND STOCK PERFORMANCE (2024-2030)

2024-2025: AI Enthusiasm and Valuation Expansion

The period from January 2024 through December 2025 was characterized by explosive enthusiasm for AI-driven software valuations. Tech stocks globally rallied: - NASDAQ: +38% (2024-2025) - Chinese tech stocks: +22% (despite regulatory concerns) - European tech stocks: +31%

Prosus benefited from two tailwinds: 1. Tencent valuation expansion: Tencent's market cap expanded from $208 billion to $285 billion (37% increase) as investors re-rated the stock on AI opportunities (gaming AI, WeChat AI assistant capabilities, cloud AI). 2. Delivery Hero re-rating: Delivery Hero was viewed as a beneficiary of AI-driven logistics optimization. The stock rallied 45% in 2024-2025.

Prosus stock price appreciated 42% from January 2024 ($18.30/share) to December 2025 ($25.95/share).

NAV appreciation: NAV increased from $87.3 billion to $119 billion, driven primarily by: - Tencent: $56.8B → $77.8B (+37%) - Delivery Hero: $8.2B → $11.9B (+45%)

However, the NAV discount widened from 21% to 23%, reflecting investor skepticism about the sustainability of growth-stage company valuations.

2025-2028: Profitability Reckoning and Valuation Reset

Beginning in Q4 2025, tech investor sentiment shifted dramatically. Multiple pressures converged:

1. Interest rate inflection (2025-2026): Federal Reserve maintained elevated rates through 2025-2026 to combat persistent inflation. Higher discount rates made unprofitable growth companies significantly less attractive.

2. Profitability focus: Investors shifted from "growth at all costs" to "profitable growth." Companies burning massive cash (Delivery Hero, DoorDash, Uber Eats) faced intense scrutiny.

3. Chinese regulatory uncertainty: In Q2 2026, the Chinese government announced new restrictions on gaming time and online content, creating uncertainty about Tencent's long-term growth.

4. Macro slowdown: European and U.S. economic growth decelerated in 2027, creating headwinds for consumer-facing tech.

The result was a severe re-rating:

From December 2025 to December 2027, Prosus stock declined 50% ($25.95 → $12.80). NAV declined 34% ($119B → $78B), reflecting: - Tencent: $77.8B → $48.2B (-38%, multiple compression from 3.8x to 2.8x) - Delivery Hero: $11.9B → $4.1B (-66%, on cash burn and lack of path to profitability) - Food delivery operations: $12.1B → $7.8B (-36%, on persistent losses)

2028-2030: Stabilization and Portfolio Rebalancing

Beginning in Q4 2028, Prosus initiated strategic portfolio rebalancing:

1. Tencent: Began modest diversification, trimming stake from 27.2% to 26.1% by June 2030, raising $4.2 billion in proceeds
2. Delivery Hero: Divested 40% of stake in Q1 2029, realizing $1.8 billion
3. Food delivery operations: Consolidation efforts; merged Brazil operations with local competitors, reducing cash burn by 45%
4. Classifieds: Strategically sold underperforming assets; consolidated around OLX as core holding

The result was portfolio stabilization:

SECTION THREE: TENCENT: THE ANCHOR AND THE ALBATROSS

Tencent's 2024-2030 Business Evolution

Tencent's core business generated extraordinary cash flow:

Despite geopolitical tensions and regulatory pressure, Tencent remained highly profitable and cash-generative.

The regulatory gauntlet: - 2024-2025: Gaming time restrictions for minors (already implemented in 2021) - 2025-2026: Fintech regulatory consolidation (WeChat Pay faced increased oversight) - 2026-2027: Cloud business antitrust concerns - 2027-2028: Gaming license restrictions (number of new games approved annually declined)

By 2028, these regulatory pressures had moderated somewhat, but Tencent's growth rate had decelerated to 2-3% annually—far below historical norms (8-12% historically).

AI opportunities: Tencent invested heavily in generative AI, particularly: - Gaming AI: AI-powered NPCs and content generation (improving game stickiness) - WeChat AI assistant: Integrated AI capabilities into WeChat (competing with ChatGPT-like services) - Cloud AI: Positioning Tencent Cloud as enterprise AI provider in China

By 2030, AI-related services represented $800 million of annual revenue (1.8% of total), growing 45% YoY.

Prosus's Tencent Valuation Framework

Prosus valued Tencent using a sum-of-the-parts methodology:

Core Business (Gaming, Social, Fintech): 35x trailing EBITDA (2030) - EBITDA: $16.9 billion - Multiple: 35x (justified by 37.8% margins, 15% ROE, Chinese dominance) - Valuation: $591 billion - Prosus stake (26.1%): $154 billion

AI upside options (20% probability weight): - If AI monetization accelerates to $5 billion revenue by 2033 (5% of total), and margins remain 35%, incremental EBITDA: $1.75B - Additional valuation at 35x: $61 billion - Weighted value: $12 billion

Regulatory discount (15% probability weight): - If Chinese tech faces additional regulatory setbacks, valuation could compress to 25x EBITDA - Downside valuation: $423 billion - Discount: $168 billion - Weighted impact: -$25 billion

Net Tencent valuation (2030): $578 billion Prosus stake value: $151 billion (26.1%)

At June 2030 market prices, Tencent trades at 32x trailing EBITDA (a 9% discount to the historical 35x multiple), reflecting lingering regulatory uncertainty.

Tax and Liquidity Constraints

Prosus's ability to monetize the Tencent stake is constrained by: 1. Chinese outbound investment regulations: Moving capital out of China is restricted 2. Tax efficiency: A complete exit would trigger significant tax liability (estimated $15-20 billion) 3. Shareholder concentration: Naspers controls 50.1% of Prosus; strategic incentives may differ from minority shareholders

As a result, Prosus is effectively a "long-term holder" of Tencent, unable to dynamically rebalance.

SECTION FOUR: FOOD DELIVERY: THE BURNING CASH MACHINE

The Unit Economics Problem

Food delivery faced inherent unit economics challenges:

At scale, food delivery players are structurally unprofitable at the unit level unless: 1. Delivery costs decline (through automation: drones, autonomous vehicles) 2. Commission increases (raising restaurant prices, reducing competitiveness) 3. Marketing efficiency improves (reducing CAC through network effects)

Delivery Hero had attempted all three strategies with limited success:

Strategy 1: Automation - Drone delivery pilots in Europe (2025-2026): Limited due to regulatory barriers - Autonomous vehicle integration (2027-2028): Minimal penetration (<2% of deliveries)

Strategy 2: Commission increases - Commission raised from 25% to 30% (2026) - Result: Restaurants defected to competitors (DoorDash, Gojek) - Outcome: Failed strategy

Strategy 3: Network effects - Market consolidation in Brazil (merged with iFood-adjacent competitor): Reduced competition, stabilized commissions - Result in other markets: Continued fragmentation

2024-2030 Delivery Hero Financial Performance

The trajectory was improving but remained substantially unprofitable. Delivery Hero had been burning $800+ million annually from 2024-2026 and remained cash flow negative in 2030.

Prosus's response: In Q1 2029, Prosus sold 40% of its Delivery Hero stake for $1.8 billion, reducing exposure from $8.2 billion (2024) to $4.1 billion (2030). This was a strategic de-risking move, accepting a loss on the investment and reducing portfolio volatility.

Prosus's Direct Food Delivery Operations

Prosus directly operated food delivery platforms in Brazil, Poland, Portugal, and several other markets. These operations faced similar unit economics challenges:

• 2024 revenue: $3.2 billion
• 2024 operating loss: -$280 million
• 2030 revenue: $3.1 billion (flat)
• 2030 operating loss: -$120 million (improving)

Management consolidated operations and reduced customer acquisition spending, trending toward breakeven by 2031-2032. However, the secular challenge remains: food delivery is structurally unprofitable absent technological breakthroughs (autonomous delivery).

SECTION FIVE: CLASSIFIEDS: THE CASH MACHINE FACING DISRUPTION

OLX: Legacy Platform, Declining Trajectory

OLX was Prosus's largest classifieds platform, operating across 15 countries in Europe, Africa, and Latin America:

OLX was highly profitable (11.6% EBITDA margin) but faced secular decline. Facebook Marketplace and WhatsApp had captured significant market share from traditional online classifieds platforms. Growth was flat to negative across most geographies.

Why Prosus kept OLX: 1. Cash generation: $22 million annual EBITDA funded corporate overhead 2. Optionality: Could be packaged with emerging market positions for a strategic exit 3. Path to profitability: Unlike Delivery Hero, OLX had already achieved profitability

Risk factors: - Secular decline (migration to social media) - Emerging market exposure (currency, regulatory) - Limited growth opportunities

By 2030, OLX represented 1.5% of Prosus's NAV—a minor holding but strategically useful.

SECTION SIX: THE NAV DISCOUNT AND CAPITAL ALLOCATION

The Persistent Discount

Throughout 2024-2030, Prosus traded at a persistent discount to net asset value:

The discount ranged from 18% (Bull case, late 2025) to 38% (Bear case, late 2027). By June 2030, the average discount was 31.2%.

Drivers of the discount: 1. Illiquidity of major holding (Tencent): Tencent stake is large, illiquid, and tax-encumbered 2. Concentration risk: 58% of NAV in Tencent (Chinese single-country exposure) 3. Unprofitable growth companies: Delivery Hero and food delivery operations 4. Conglomerate discount: Investors typically discount holding company structures by 15-20% 5. Taxes on exit: Implied tax costs on NAV realization

Capital Allocation and Shareholder Returns

Prosus management prioritized:

1. Dividend maintenance: Prosus paid an annual dividend of approximately $1.10 per share (2024-2030), yielding 5-6% at mid-cycle valuations. Total dividends paid: $5.8 billion over 6 years.

2. Share buybacks: Limited buyback activity (only $800 million total, 2024-2030). Management was constrained by the need to maintain investment-grade debt ratings.

3. Strategic portfolio optimization: - Sold 40% of Delivery Hero stake (2029): $1.8 billion proceeds - Reduced Tencent stake modestly (2028-2030): $4.2 billion proceeds - Consolidated food delivery operations: Reduced cash burn by $2.1 billion cumulatively

4. New investments: Modest deployment of capital into: - Southeast Asian fintech platforms (SoftBank partnership) - African fintech (Flutterwave, Paystack partnerships)

SECTION SEVEN: COMPARATIVE PERFORMANCE AND RETURNS ANALYSIS

Prosus vs. Peers (2024-2030)

Prosus underperformed both Berkshire Hathaway (a diversified conglomerate) and peer holding companies. This underperformance was driven by: 1. Portfolio composition: Heavy exposure to unprofitable growth companies 2. Leverage structure: Unlike Berkshire or 3i, Prosus used little to no leverage 3. Capital allocation: Conservative capital return policy (dividend instead of buybacks)

Implied Returns by Asset Class

Working backward from stock returns, implied CAGR by asset class:

The portfolio underperformance was driven primarily by Delivery Hero (-12% CAGR) and food delivery operations (-6.2% CAGR).

SECTION EIGHT: RISKS AND OUTLOOK

Key Risks (Ranked by Probability × Impact)

1. Tencent regulatory crackdown (40% probability, -30% impact): Further Chinese government restrictions on gaming, fintech, or cloud could compress Tencent valuations by 30%+, cascading to -$15 billion NAV impact.

2. Delivery Hero path-to-profitability failure (35% probability, -25% impact): If unit economics fail to improve, Prosus could face additional writedowns, -$3 billion NAV impact.

3. Food delivery market contraction (45% probability, -15% impact): Macro slowdown could reduce order volumes and pricing power, extending path to profitability by 2-3 years, -$1.5 billion NAV impact.

4. China-Taiwan escalation (20% probability, -50% impact): Geopolitical escalation could trigger Tencent delisting or sanctions, -$80 billion NAV impact.

Strategic Outlook (2030-2035)

Management is signaling a strategic shift toward:

1. Tencent optimization: Modest, gradual diversification (selling 1-2% of stake annually) to reduce concentration 2. Food delivery rationalization: Continue consolidation; target breakeven by 2032 3. Fintech diversification: Build positions in emerging market fintech platforms (higher growth than classifieds, better unit economics than food delivery) 4. Portfolio simplification: Divest underperforming assets; focus on core holdings with clear paths to profitability or exits

The implied strategy is positioning Prosus less as a "venture capital conglomerate" and more as a "blue-chip tech holding company" with focus on profitable, cash-generative assets.

THE BULL CASE ALTERNATIVE: NAV Discount Compression and Tencent Multiple Expansion

The bull case rests on three critical catalysts: (1) successful portfolio optimization accelerating Delivery Hero divestiture (and remaining food delivery asset sale) by 2031-2032, eliminating portfolio drag and reducing investor skepticism about management's capital allocation discipline; (2) Tencent multiple expansion from 32x to 38-40x EBITDA as Chinese regulatory uncertainty moderates and AI monetization demonstrates tangible revenue contribution (reaching USD 2+ billion by 2033-2035); (3) NAV discount compression from current 31% to 15-20% as Prosus increasingly resembles a "blue-chip tech holding company" (comparable to Berkshire Hathaway or 3i Group) rather than a "risky venture capital conglomerate."

Under bull case assumptions, Prosus's NAV per share would expand from €26.30 (2030) to €110-130 (2035) through: Tencent valuation expansion to USD 180 billion (40x × $4.5B EBITDA), fintech emerging market growth generating USD 8-12 billion in new holdings, completed food delivery rationalization, and NAV/price multiple compression to 1.15-1.25x (vs. current 0.69x). Bull case entry points below €50/share, with accumulation at €40-45 on recession weakness. Bull case probability: 28%.

THE DIVERGENCE: BEAR vs. BULL INVESTMENT OUTCOMES

Scenario Analysis Mechanics:

Bear Case (22% probability): - Tencent regulatory crackdown accelerates (gaming restrictions expand, fintech oversight increases) - Tencent multiple compresses to 24-26x EBITDA (vs. 32x current, 35x historical) - Food delivery never achieves profitability; continued cash burn forces write-offs - Delivery Hero divestiture loss realized; NAV decline -USD 3-5 billion - NAV discount widens to 35-40% due to pessimism about management execution - Stock underperformance: CAGR -12% to -8%

Base Case (50% probability): - Tencent maintains 32-35x multiple; modest multiple expansion as regulatory uncertainty moderates - Food delivery achieves breakeven by 2032; cash burn eliminated but no profit generation - Delivery Hero divestiture completed; proceeds deployed to fintech emerging markets - NAV grows modestly to EUR 48-55 per share (3-4% CAGR) - NAV discount persists at 18-22% (conglomerate discount) - Stock returns: CAGR +2% to +5%

Bull Case (28% probability): - Tencent AI monetization accelerates; gaming AI and WeChat AI assistant drive incremental growth to 5%+ CAGR - Tencent multiple expands to 38-42x on recognition of sustainable growth + AI upside - Food delivery operations become profitable; EUR 200-250M annual EBITDA by 2035 - Fintech emerging market positions appreciate to USD 25-35 billion (SoftBank partnership, Flutterwave, Paystack, others) - NAV discount compresses to premium (1.15-1.25x) as Prosus repositions as "quality tech holding company" - Stock returns: CAGR +35% to +42%

Probability-Weighted Valuation (2035): - Bull case (28% probability) × €100 = €28 - Base case (50% probability) × €51.50 = €25.75 - Bear case (22% probability) × €31.50 = €6.93 - Probability-Weighted Fair Value per Share (2035): €60.68 - Implied 5-year CAGR return: +3.1%

Current Market Assessment (June 2030): - Current price: €53.50/share - Implied 2035 fair value (PW): €60.68 - Implied return: +13.4% over 5 years, or +2.5% CAGR - Valuation: Slightly undervalued (3-5% discount)

Investment Implication: At current pricing of €53.50, Prosus appears attractively valued if base case executes (modest 2-5% CAGR) or bull case materializes (35-42% CAGR). However, downside risk (bear case -12% CAGR) is material if Tencent regulatory headwinds intensify or food delivery path-to-profitability fails. The stock is best suited for value investors seeking (1) Tencent exposure at a discount, (2) implicit leverage to emerging market fintech growth, (3) cash dividend income (5-6% yield).

Rating Adjustment: HOLD with accumulation on weakness below €50/share.

CONCLUSION

Prosus has delivered flat returns (1.2% CAGR, 2024-2030) to shareholders, reflecting the structural challenges of a conglomerate holding company with concentrated exposure to unprofitable growth companies and illiquid stakes in regulated markets.

The underlying portfolio has value—Tencent remains a world-class business, and classifieds generate steady cash flow. However, the NAV discount (31.2% at June 2030) and portfolio drag from unprofitable growth companies have prevented Prosus from delivering attractive returns.

For prospective investors, Prosus faces a strategic juncture: either accelerate portfolio rebalancing (divesting Delivery Hero, consolidating food delivery) and re-rate toward a "blue-chip holding company" multiple (1.2-1.4x NAV), or accept continued underperformance as the portfolio slowly liquidates.

RATING: HOLD (reduce on strength)

Current valuation: Fair at 0.69x NAV; Avoid at >0.75x NAV

REFERENCES & DATA SOURCES

This memo synthesizes macro intelligence from June 2030 regarding Prosus's investment profile, portfolio composition, and financial performance. Key sources and datasets include:

1. Prosus N.V. FY2030 Annual Report and Financial Statements – Official earnings results, net asset value calculations, portfolio company valuations, and capital allocation through June 2030.

2. Tencent Holdings Limited Financial Analysis, 2024-2030 – Stock price performance, operating metrics, regulatory environment assessment, and valuation comparison to Prosus holding value.

3. Delivery Hero SE Operating Results and Strategy, 2024-2030 – Operating performance, burn rate evolution, unit economics, market consolidation, and profitability timeline assessment.

4. Classifieds.com and OLX Portfolio Performance, 2024-2030 – Revenue trends, profitability contribution, competitive positioning, and cash generation to Prosus.

5. Emerging Market Internet and Fintech Investment Trends – PitchBook, Crunchbase, 2024-2030 – Investment trends in emerging market internet companies, valuation metrics, and market growth forecasts.

6. Conglomerate Holding Company Valuation Analysis – Goldman Sachs, Morgan Stanley, 2024-2030 – Net asset value discount analysis, trading multiples, and comparative holding company valuations.

7. Chinese Regulatory Environment and Tech Regulation – Bloomberg, Reuters, 2024-2030 – Policy developments affecting Chinese tech companies, investment restrictions, and regulatory stability assessment.

8. Prosus Investor Communications and Capital Allocation, 2024-2030 – Quarterly earnings calls, investor presentations, dividend policy, and strategic guidance.

9. Global Food Delivery Market Analysis – Gartner, Allied Market Research, 2024-2030 – Market size, competitive dynamics, consolidation trends, and profitability outlook.

10. Holding Company Valuation Comparables – Bloomberg, CapitalIQ, June 2030 – Price-to-NAV multiples, P/E multiples, dividend yield comparisons, and cost of equity benchmarking.

11. Asian Internet and Technology Company Valuations – FactSet, Capital Markets Research, 2024-2030 – Valuation metrics for Tencent, emerging market internet companies, and technology sector comparables.

12. Prosus Shareholder Base and Institutional Positioning – SEC Filings, Facteus, 2024-2030 – Institutional ownership patterns, activism, investor engagement, and shareholder sentiment trends.

The 2030 Report does not hold positions in Prosus. This analysis is for informational purposes only.