The share price of insurer Prudential fell eight per cent today following news it would split off its US business through a demerger.
Following pressure from activist investor Third Point, Prudential agreed to split off its US business Jackson through a demerger that could raise between $2.5 and $3bn in new equity.
In response Prudential’s share price sunk by nearly nine per cent, taking the stock to its lowest price this year of 1,224p.
Prudential had planned for an initial public offering of Jackson, but today it said a demerger would allow a quicker separation than a minority IPO and future sell-downs.
The Jackson demerger would “significantly accelerate Prudential’s transformation into a business purely focused on profitable growth in Asia and Africa”, Prudential CEO Mike Wells said in a statement.
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Asia has been Prudential’s fastest growing unit for several years. Prudential said it could raise equity capital in London, Hong Kong or both.
Prudential split off its British life insurer M&G through a demerger in 2019.
Peers Standard Life Aberdeen and Old Mutual have also broken up complex insurance and asset management businesses in recent years.
Prudential said it would retain a 19.9 per cent non-controlling interest in Jackson. Former MetLife CEO Steven Kandarian will become non-executive chair of Jackson from 1 February.