Prudential plan to list in HK, but no new shares
Updated: 2010-03-09 07:34
(HK Edition)
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Prudential Plc, the UK insurer that is buying an American International Group Inc unit in Asia, says it will accelerate plans to list in Hong Kong before holding a record $20 billion rights offer that will help finance the deal.
Prudential has no plans to issue new shares as part of the listing, the London-based company said yesterday in a statement.
The listing means "that any selling of the shares in London could be more easily taken up by finding new investors in Hong Kong," Marcus Barnard, a London-based analyst at Oriel Securities Ltd, wrote in a note to clients dated yesterday.
Prudential, which agreed to the $35.5 billion purchase of AIA Group Ltd on March 1, saw its shares drop almost 20 percent in the two days following the announcement, as investors balked at the price of the deal. Chief Executive Officer Tidjane Thiam said he expects Asian investors who were being lined up to invest in AIA's planned IPO will take part in Prudential's fundraising.
Meanwhile, a senior executive in a rival insurance company, British insurer Aviva, said the proposed $35.5 billion takeover of AIA by Prudential will offer opportunities for rival insurers to increase their market share in Asia.
"For competitors it does give some opportunities," Simon Machell, chief executive of Aviva Asia-Pacific, said in an interview yesterday, adding, "First of all, while they go through what is going to be a big, complicated and time-consuming merger, there will be opportunities to take some business."
The transformation deal is expected to put pressure on insurers to seek more mergers to remain competitive in the fast-growing Asian region. The Prudential-AIA combine is set to become the dominant player in at least nine Asian markets if the deal goes through.
However, Machell said the deal was unlikely to change Aviva's Asian growth strategy, which is largely built around organic growth.
Machell said Aviva's Asian operations were showing signs of a pick-up and the improvement in sales achieved in the fourth quarter of 2009 had continued into 2010.
A source working on the Prudential/AIA transaction said the Pru/AIA combine would be three times bigger than the total annual sales of its next four rivals in Asia.
Agencies - China Daily
(HK Edition 03/09/2010 page2)