China’s PBC builds stake in Prudential
Prudential has poured cold water on suggestions that it should spin off its Asian arm into a separate company, as it emerged that the People’s Bank of China has built up a one per cent stake in the UK’s second-largest insurer.
Chief executive Mark Tucker has fought an ongoing battle on two fronts to convince investors of the quality of its Asian business and to resist pressure from shareholders for a break-up of the company.
And there has been speculation among analysts that the PBC’s share acquisition, worth around £134m, could see shareholders revisit the issue with the aim of forcing executives to reconsider a restructuring of the company
But Prudential spokesman Jon Bunn said there were no plans to succumb to pressure for a break-up and added that a takeover bid from PBC was not imminent.
He said: “The group is far stronger as a whole, both financially and in the way we are able to share expertise across the company.”
The Chinese bank is thought to see the Pru as a long-term vehicle for the dispersal of its funds abroad, as China looks to deposit capital reserves in large well-performing Western businesses.
It has been quietly building its share in the insurer on the open market, remaining invisible on the share register by using a nominee account to hold the shares and sticking below the three per cent threshold above which investors must declare their holdings.
And the PBC is also understood to be lining up other targets in the West, including Legal & General and Old Mutual.
Chinese businesses have been quick to snap up opportunities in European businesses in recent months. Barclays, BP and Rio Tinto have all seen substantial investment from Chinese firms.
And Prudential has built up a good reputation in the Far East under the stewardship of Tucker, as a burgeoning Asian middle class rushed to snap up its insurance products.