Prudential – New Chapter, New Checks

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Prudential – New Chapter, New Checks
3844328 / Pixabay

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.”


About Hargreaves Lansdown

Over 1.64 million clients trust us with £135.5 billion (as at 30 June 2021), making us the UK’s largest digital wealth management service. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month.

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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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