Prudential sells off Jackson for $5bn to concentrate on Asia

THE Prudential today joined the growing surge in corporate deal-making as it unveiled plans to sell all of its $5 billion Jackson Life operation and focus its investment on fast-growing Asia. The insurance giant, which has already split off its UK operations into M&G Plc, signalled in March that a partial flotation of Jackson was its preferred option.

Today it confirmed an initial IPO would launch in the first half of next year, followed by a full disposal over time.

To fund Asian investment, and reflecting the departure of Jackson, dividends for Pru shareholders will be reduced.

It recently completed a deal to bring in a new investor, Athene, into Jackson Life with a deal valuing the group at $4.5 billion, but that is seen as a conservative valuation by analysts.

Funds raised from the sale would be pumped into expanding its fast-growth Asian and African businesses.

The Pru has been under attack from US activist hedge fund Third Point to focus its efforts more aggressively on the Asian business but the 172-year-old insurer insists it was going to carry out such a plan anyway.

Third Point also told the board to close its UK headquarters, but the Pru refused, today reaffirming its commitment to its London base.

As if to highlight the rationale for the split, first-half operating profits in its Asian division jumped 14% in figures published today.

Mike Wells, chief executive, said: “The board has decided to pursue the full separation and divestment of Jackson to enable the group to focus exclusively on its high-growth Asia and Africa businesses. This would result in two separately listed companies with distinct investment propositions, which we believe would lead to improved strategic outcomes for both businesses.”

He said the Pru would have primary listings in London and Hong Kong plus secondary listings in Singapore and the US. Jackson would be listed in the US.

Figures for last year show that for every $1 it invested in new business in Asia, it made around $6 of profit.

Under the new, less generous dividend policy, it will kick off with a first interim dividend for 2020 of 5.37 cents a share.

Under the previous regime, that would have been 12.28p.

Shares in the Pru jumped 36.5p to 1268.50p on the news, highlighting that investors were unfazed by the divi cut.

The divestment of Jackson will enable the group to focus exclusively on its highgrowth Asia and Africa businesses Mike Wells chief executive