Prudential – New Chapter, New Checks

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The previously announced demerger of the US business, Jackson, completed on 13 September 2021. Prudential plc (LON:PRU) has now announced it plans to raise up to $2.89bn by issuing new shares on the Hong Kong stock exchange. 95% of the new shares will be from a share placing. The remaining 5% will be from a public offer of new shares, available to Hong Kong residents, with a preferential offer for some Prudential employees.

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The majority of the proceeds will be used to repay debt, while the rest is earmarked to help Prudential make the most of growth opportunities in Asia.

The shares fell 4.1% following the announcement.

Prudential Is Looking To Make The Most Of Opportunities In Asia

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown:

“Prudential is closing the book on a messy chapter, with the breakup of the American and Asian businesses now complete, it’s looking to make the most of opportunities in Asia. The addressable market here is huge, so coming to the market cap-in-hand does make sense. The scale of the amount needed might be a bit disappointing, but it also adds risk. When you’ve asked for money, the reaction will be harsh if things don’t go to plan.

The mammoth task ahead is also limiting returns to shareholders, with the dividend yield a little under 1%. Again, this is by no means a huge issue. However, the biggest question now is one of execution. Grandiose opportunity is very different to pulling it off.”

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