M&G Prudential will be split from Prudential PLC, giving the money manager more control over its strategy and capital allocation.
Insurance group Prudential PLC said in an announcement Wednesday it intends to spin off M&G Prudential, which has £351 billion ($484.3 billion) in assets under management, and for the firm to be headquartered and premium-listed in London. The remaining insurance group will focus on opportunities in Asia, the U.S. and Africa.
Upon completion of the spin off, shareholders will hold interests in both Prudential PLC and M&G Prudential. The firm said the timing of the spin off is subject to a number of factors, including the completion of the sale of M&G Prudential's £12 billion annuity portfolio to Rothesay Life. It is also dependent upon market conditions and the transfer of Hong Kong insurance subsidiaries within the group.
Prudential said in August it would merge money management business M&G Investments with life insurance unit Prudential U.K. & Europe, creating M&G Prudential. The combined business offers strategies under both brands and brought together M&G's active money management approach and Prudential U.K. & Europe's retirement savings and liability-driven investing capabilities.
The money management business will continue to be led by current CEO John Foley, with Anne Richards continuing in her role as deputy CEO. A spokesman for Prudential said there will be no change to the management team of the M&G business. As a new and separately listed company, a board will be appointed to M&G Prudential. The spokesman said an announcement will be made in due course.
"The decision to demerge M&G Prudential follows a rigorous review by the board, which considered all options, including the status quo, and concluded that it is in the best interest of the group to operate as two separately listed companies, able to focus on their distinct strategic priorities in their chosen geographies," said Paul Manduca, chairman of Prudential PLC, in the announcement. "Both are expected to meet the criteria for inclusion in the FTSE 100 index."
Added Mike Wells, group CEO: "Following separation, M&G Prudential will have more control over its business strategy and capital allocation. This will enable it to play a greater role in developing the savings and retirement markets in the U.K. and Europe through two of the financial sector's most trusted brands, while Prudential PLC will be able to focus on the attractive returns and growth potential of its market-leading businesses in Asia and the U.S."
Also on Wednesday, Prudential PLC announced its 2017 annual report. Profit for its money management businesses was a record £500 million in 2017, up 18%. Assets under management increased 12.8% to £351 billion, while external assets under management grew 20.4% to £219.7 billion. External net inflows totaled £17.3 billion in 2017, vs. net outflows of £8.1 billion in 2016.