Hedge fund manager Dan Loeb has called for the breakup of insurance company Prudential after taking a near $2bn stake.
Loeb's New-York based investment firm Third Point has built a 5% stake in the insurance firm and is now pushing for it to separate its Asian and US operations.
"While we applaud Prudential Plc for taking the initial step of separating its European operations into M&G Plc, we believe that a more significant opportunity exists: separate the company's Asian and United States operations to increase investment in both businesses, optimise growth, and drive higher valuation," stated Third Point founder and chief executive Daniel Loeb in a 1,800-word letter to the insurer's board.
Separate the company's Asian and United States operations to increase investment in both businesses, optimise growth, and drive higher valuation"
Third Point, which specialises in shareholder activism, believes that the separately managed franchises PruAsia and Jackson "have distinct strengths but share no discernable benefit from being operated under the same corporate umbrella".
The $14bn activist hedge fund said it made no strategic sense for the £37bn insurer to be listed in London, demanding it ends its 172-year presence in the UK as it no longer has operations in the country.
According to Reuters, which first reported the holding, Third Point believes additional benefits of a break-up would include cost cuts, better capital allocation policies and improved management of the US and Asia businesses.
In a statement posted on the London Stock Exchange this morning, Prudential said it would open a dialogue with Third point to address the issues raised by Third Point.
‘Prudential proactively engages with shareholders with regards to group strategy and structure, and looks forward to commencing a dialogue with Third Point with regard to the views outlined in its letter,' the statement read.
Bankers have long seen a separation of the remaining businesses as the next logical step, but have questioned whether Prudential would be able to get a strong valuation for Jackson if it were to be sold or floated.