PREVIEW-Brand names to help Pru Asia listing draw investors

* Prudential starts trading in HK, S’pore on May 25

* Asia investors like Pru, AIA brand names, pan-Asia
exposure

* Prudential shares worth about 227 pence after rights –
SIAS

By Kevin Lim

SINGAPORE, May 21 (BestGrowthStock) – Prudential (PRU.L: ) is
expected to get a warm welcome from Hong Kong and Singapore
investors when its shares start trading on Tuesday, helped by
its strong brand name and pan-Asian presence.

Granted, like any public listing, the newly public shares
will be at the mercy of the market.

But even as Western fund managers fret about the risks
involved in the UK insurer’s $35.5 billion acquisition of AIA,
the Asian life insurance arm of AIG (AIG.N: ), many in Asia see
an opportunity to buy into a company that be a regional
behemoth.

Despite the risks of the takeover failing, Asian retail and
institutional investors alike recognize that buying into Pru
will also be buying into AIA, a widely recognized name
throughout the region.

“The Prudential listing will be popular among retail
investors. There’s the strong brand name and it’s very
visible,” said Moh Tze Yang, lead analyst at SIAS Research, the
research arm of the Securities Investors’ Association of
Singapore.

The enlarged Prudential, with AIA in its fold, offers
investors exposure to many Asian markets, unlike Chinese
insurers listed in Hong Kong which are pure-China plays, he
said.

How the listings trade at first should be similar to any
new offering, in that if overall market sentiment is strong
that day, the stock should trade up. If sentiment is weak, it
won’t. The underwriters are allowed to provide liquidity for
the shares when they open.

The IPOs on Tuesday will be by introduction, a process in
which the company does not actually raise money by pricing
shares. Instead, it’s a transfer of shares, in this case, with
around $100 million converted already from its London listing.
(To read more about the process, please click on
[ID:nTOE63M06Y].

BILLIONAIRES’ BACKING

Pru Chairman Harvey McGrath will be on Hong Kong on Tuesday
for the listing.

Asian institutions have also been supportive of
Prudential’s $21 billion rights issue — with Singapore’s giant
sovereign wealth fund GIC [GIC.UL] acting as one of the
underwriters, and Hong Kong billionaires Li Ka-shing and Cheng
Yu-tung indicating interest in buying the shares.
[ID:nLDE64J1WF]

SIAS is recommending investors pay up to S$2.50 — or about
123 pence — for the rights, valuing Prudential at around 227
pence after the issue.

Prudential, which closed at 516.5 pence a share on
Thursday, is theoretically worth 167 pence a share once its
ongoing rights issue of 11 new shares at 104 pence apiece for
every two existing shares is completed.

According to Prudential, the absorption of AIA will make it
the largest life insurer in Hong Kong and Southeast Asia. The
combined group will also be the biggest foreign insurer in
China and India, with substantial operations in the United
States and Britain.

In contrast, Hong Kong-listed insurers China Life <2628
.HK>, China Pacific (601601.SS: ) (2601.HK: ) and Ping An Insurance
(2318.HK: ) have few businesses outside China. Singapore-listed
Great Eastern Holdings (GELA.SI: ), the insurance arm of
Oversea-Chinese Banking Corp (OCBC.SI: ), is present mainly in
Singapore and Malaysia.

Despite the expected support from Asian investors,
Prudential will have its work cut out to justify what some see
as the high price it paid for AIA.

Stock Market Today

(Additional reporting by Harry Suhartono)
(Editing by Michael Flaherty and Muralikumar Anantharaman)

PREVIEW-Brand names to help Pru Asia listing draw investors