United Kingdom

Prudential tumbles as it turns to Hong Kong in £2.1bn equity drive

Shares in Prudential fell after the life insurer announced plans to raise £2.1billion from investors in Hong Kong.

The stock, listed in both London and Hong Kong, slipped 8.4 per cent as it said it would sell new shares worth up to 5 per cent of the company. 

The massive equity raise, only open to Hong Kong investors, has sparked questions over Prudential's commitment to the UK.

Equity drive: Prudential stock, listed in both London and Hong Kong, slipped 8.4 per cent as it said it would sell new shares worth up to 5 per cent of the company

While its HQ is in London – a legacy of its British roots stretching back almost 200 years – it is now entirely focused on Asia, after spinning off its UK arm M&G and its US business Jackson.

Russ Mould, investment director at AJ Bell, said: 'It could lay the groundwork for a dramatic break from the UK in the future.'

Activist hedge fund Third Point, headed by US billionaire Dan Loeb, campaigned last year for Prudential to end its 173-year presence in the UK but it has so far not done so. 

If it ditches its UK listing to focus on Hong Kong, it would be booted off the FTSE 100 index, making it uninvestable for funds which focus on the blue-chip index.

Abid Hussain, at broker Shore Capital, said: 'I think it would be a mistake to delist from the FTSE 100, given the interest in the name from institutional investors here and across Europe and the US.'

Hussain pointed out that it made sense for the firm to spread out its investor base.

'The placement of shares in Hong Kong is just another step in shifting the focus of the group to the growth markets in South East Asia,' he said.

Mark FitzPatrick, Prudential's chief operating officer, said: 'We will continue to maintain a meaningful presence in London to support our most liquid primary listing and our capital markets relationships.'

Prudential's future lies outside uk

The 173-year-old Prudential was a stalwart of the UK's business scene but is now a fraction of its former size. 

It famously insured more than 320 victims of the Titanic, and was a household name during the 1960s when 'Man from the Pru' agents used to visit 6m homes. 

But it broke with its heritage after spinning off its UK operations in 2019 into M&G, which is listed separately on in London, and still offers some products under the Pru brand in Britain.

Jackson, Prudential's US unit, has also been hived off. Its major business is now Prudential Corporation Asia based in Hong Kon

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