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Prudential chief 'not surprised' by interest in high-growth Asia business

M&G Investments sponsors the annual Chelsea Flower Show in London - PA
M&G Investments sponsors the annual Chelsea Flower Show in London - PA

Prudential chief executive Mike Wells said he is "not surprised" competitors are eyeing up the firm's high-growth Asia arm amid speculation rivals are weighing up a bid. 

Mr Wells told investors on Wednesday that performance in the first-half had "again been led by Asia" as double-digit growth in the region helped drive the FTSE 100 firm's profits up 9pc to a record £2.4bn.  

The insurance giant is in the process of splitting its UK and European businesses from the rest of the group, causing speculation that a competitor could make a move for its prized Asian arm. Sources told Bloomberg on Wednesday that Chinese insurer Ping An is weighing up a deal.  

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"Before that story broke I spoke about the fact I've been to China twice in the last week – that had nothing to do with M&A," Mr Wells told The Daily Telegraph. "One was personal, and the other was to see regulators on the new structure. Nothing to do with M&A." 

While he would not comment directly on Ping An, he said that Prudential had a hard business model to replicate in Asia and so it was "not surprising to me if somebody in a boardroom is looking at the qualities of the business saying we want those".  

Markets Hub - Prudential
Markets Hub - Prudential

He said the plan was to keep all the businesses it currently owns, although "if someone's talking to us we have to listen". 

One of the biggest financial services companies in the world, a break-up has been on investors' wish-lists for at least a decade amid concerns Prudential's UK business was underperforming.   

The 170-year old company announced its break-up plans in March, months after it merged its European insurance unit with its UK fund manager, M&G.

Mr Wells said the demerger was "progressing well" and the group has been busy putting the board together, going through regulatory approvals, upgrading systems and rejigging the firm's debt structure. Between 120 and 160 staff are working on the process, he said. 

"[It could complete by the] end of next year, start of the year after. We need to make sure investors have clear financials. There's urgency to do it clearly and correctly, not recklessly of costs."    

The company's first half results showed that the group continued to cash in on Asia's rapidly growing middle classes during the opening months of the year, posting an 11pc boost in new business profit in Asia.

Total profits in Asia rose 7pc to £1.02bn over the first half, the company said, making it Prudential's biggest contributor to profits after the US.  

Meanwhile net inflows at M&G, which sponsors the annual Chelsea Flower Show in London, shrunk 51pc to £3.5bn while UK profits inched up 4pc to £778m.