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Prudential Accelerates Planned Honk Kong Listing

Posted on 09 Mar 2010

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Prudential, the UK life insurer, plans to list in Hong Kong ahead of its $20 billion rights issue, in a surprise move that could encourage local investors to buy shares in support of its $35.5 billion agreed deal to buy AIA, AIG's Asian businesses.

The acceleration of the listing, which was announced on Monday, represents an apparent turnaround from the company’s statement last week that it would "consider seeking a dual due course after completion of the transaction".

However, the Pru had filed its application to list at the beginning of last month. Tidjane Thiam, its chief executive, obtained clearance from regulators last week to speed up the process, said people close to the situation. Prudential said it would not offer any new ordinary shares in Hong Kong.

Mr. Thiam is conducting an intensive set of meetings with UK-based investors this week to try to ensure they vote in favour of the rights issue and the deal after some complained of poor communication and a lack of financial information on the deal from the Pru.

Plenty of Asian investors, many of whom were being lined up for the initial public offering of AIA, the Asian business of AIG, are keen to invest in the combined group, according to people familiar with the deal.

A Hong Kong listing could encourage some Asian investors to buy into the Pru ahead of its rights issue. The company is hoping that the listing will support its share price, which fell 14 per cent last week after news of the deal.

The company had been preparing a potential Asian listing for some months before the AIG deal as part of its plan to focus on the region’s fast-growing markets.

Asia has been the fastest-growing part of Prudential’s business for several years and the AIA deal would see the region become the biggest contributor to the group’s new business profits. Its shares ended 0.4 per cent lower at 518p in London on Monday.

Analysts said some London-based institutional shareholders would want to purge their UK portfolios of Prudential shares before it becomes a predominantly Asian business. But the Hong Kong listing would provide additional demand for the Pru’s shares, they said.

Marcus Barnard, analyst at Oriel Securities, said: “While [the dual listing] does not offer instant additional liquidity, it does mean that any selling of the shares in London could be more easily taken up by finding new investors in Hong Kong.”

The Pru also said on Monday that it had secured a foreign exchange hedging arrangement against the AIA deal. It must convert the sterling proceeds of its rights issue into dollars to secure the AIA deal.

Tidjane Thiam, Prudential’s chief executive who visited Asia last week, had previously considered a Hong Kong listing as part of his plan to focus on the fast-growing markets in the region.