Prudential considering taking full control of joint venture in China
Prudential is reportedly in talks that could lead to it taking full control of its joint venture with Chinese lender Citic.
Changes to foreign ownership laws in China have for the first time made it possible for the insurance giant to own all of the 50:50 joint venture, which Prudential is now working towards, a source told Reuters.
Prudential has not yet made a formal application to increase its ownership of the venture, and is checking whether the plans would win the approval of Chinese authorities before submitting an application, the source said.
Citing Prudential insiders, Reuters reported that the company thinks a deal could offer a much-needed boost to China as it fights to limit the economic impact of the coronavirus outbreak.
The source said Chinese authorities could act fast to grant the necessary permissions if Citic was willing to sell its stake, saying: “They want foreign investment post-virus”.
The rapid growth of the middle classes in Asian economies coupled with the lack of state retirement provisions have driven increased demand for private life and health insurance policies in the region.
A Prudential spokesperson declined to comment on the reports.
In November, Prudential chief executive Mike Wells said the company was looking to expand its presence in China.
“We can and are increasing the effectiveness of the business we have [in China],” he told Bloomberg TV.
Wells also described the Citic joint venture as a “success”, but added: “buying more of it is not necessarily the only way to increase the value of business”.