PRUDENTIAL is considering options including selling a minority stake in its asset manager Eastspring Investments to help broaden the business, according to people familiar with the matter.
The insurer is working with a financial adviser on a review of Eastspring, the people said, asking not to be identified because the deliberations are private. A potential stake sale could value Singapore-based Eastspring at about US$3 billion, the people said.
One option includes selling about 30 per cent of Eastspring and forming a partnership that would help it diversify in areas such as private credit and assets in US dollar-denominated assets, the people said. Prudential has started sounding out prospective suitors, including other investment firms, the people said.
Prudential could decide to exclude certain markets in a potential transaction, the people said. Considerations are preliminary and no final decisions have been made, they added.
Representatives for Prudential and Eastspring declined to comment.
Prudential’s shares dropped 0.7 per cent in Hong Kong on Tuesday (Dec 10), reversing earlier gains of as much as 1.6 per cent. The stock is down 25 per cent this year, leaving the company with a market value of about US$22.5 billion.
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A sale of a 30 per cent stake in Eastspring at that valuation may give the insurer room to boost its total return yield to 10 per cent from 6.3 per cent, assuming all US$900 million is returned to shareholders, according to Bloomberg Intelligence senior industry analyst Steven Lam.
“The likely outcome is a mix of capital return and reinvesting the sale proceeds in markets with strong new-business growth potential such as mainland China and South-east Asia,” Lam wrote on Tuesday.
Rising costs and pressure on fees are prompting asset managers to seek greater scale. Some of the biggest players in Asia and Europe are still owned by banks or insurers, and often lack the heft to compete with US fund houses and alternative investment firms that have seen breakneck growth in recent years.
US insurer MetLife is in advanced talks to buy PineBridge Investments’ assets outside of China in a deal that could be valued at up to US$1.5 billion, Bloomberg News reported in October. In Europe, Allianz has been considering combining its asset management arm Allianz Global Investors with France’s Amundi, although talks are now on hold, people familiar with the matter have said.
Eastspring had US$271 billion in funds under management as of the end of September and a presence in 11 Asian markets, according to its website. BLOOMBERG
