(Yicai Global) June 27 -- Shares of Tencent Holdings dived in afternoon trading, after the Chinese internet giant’s largest shareholder said it would gradually pare its stake in the company.

Tencent [HKG: 0700] closed 1.6 percent lower at HKD378.20 (USD48.18), after gaining as much as 4.2 percent in the morning. The stock is down 35 percent in the past 12 months, reducing Tencent’s market value to HKD3.6 trillion (USD458.6 billion).

Tencent’s biggest shareholder Prosus, a subsidiary of South African media giant Naspers, will sell Tencent shares in the open market to raise funds for its stock repurchase plan, according to a press release from Naspers today.

“We expect the program to significantly increase the net asset values per share for Prosus and Naspers,” said Bob van Dijk, chief executive of Prosus and Naspers. “It will also rebalance our asset base towards our fast-growing non-Tencent assets, whose value we expect to increase over time while retaining exposure to Tencent’s significant value creation potential.”

Naspers did not say how many shares would be sold, but they will be sold in small tranches, averaging 3 percent to 5 percent of Tencent’s shares traded daily.

This is the third time that Naspers has pared its stake in Tencent in the 21 years since it first invested in the Shenzhen-based technology company. Naspers sold about 2 percent in March 2018 and another 2 percent in April last year, reducing its ownership to 28.8 percent. 

Prosus said after the sale last year that there would be no further selloffs for three years, but it and Naspers both reported a substantial decline in earnings in the year ended March 31. There are also concerns over the long-term growth of the Chinese tech sector following a government clampdown on large internet firms.

Naspers also announced today that it sold a 4 percent stake in Chinese e-commerce giant JD.Com on June 24 for USD3.67 billion. Naspers had received the stake from Tencent as a special interim dividend last December.

Editor: Tom Litting