Wednesday 11 March 2020 9:46 am

Insurance giant Prudential to float stake in US business

Insurance giant Prudential has confirmed it will float a stake in its US unit following pressure from an activist hedge fund. 

Prudential this morning said preparations are underway for a minority initial public offering (IPO) of Jackson in the US as it said it is closely monitoring the development of coronavirus. 

Read more: Prudential plans sale of stake in US arm

Group chief executive Mike Wells said the company will “commence detailed engagement with our key stakeholders” over the spin off of Jackson. 

He said: “In order to diversify at pace, Jackson will need access  to additional investment, which we believe would best be provided by third parties. Today we are announcing that preparations have commenced for a minority IPO of Jackson and we have already taken a number of management actions to support this path.” 

The move comes weeks after New York-based investment firm Third Point called for Prudential to spin off its US division, which it has owned since 1986, to focus on Asia. 

In a letter to the board last month, Third Point said separating the company’s Asian and US operations would “increase investment in both businesses, optimise growth, and drive higher valuation.”

The company offloaded its British unit M&G last year. 

 Prudential today announced that group adjusted operating profit from continuing operations increased 20 per cent to $5.31bn, driven by a 14 per cent rise in the Asian business.

Read more: Prudential faces break up calls from Dan Loeb’s Third Point

However today the company said  coronavirus has dampened sales momentum in Hong Kong and China, which is expected to have a knock on effect on future profit. 

The company said it will pay a second interim ordinary dividend of 25.97 cents per share.