Prudential faces break up calls from Dan Loeb’s Third Point
Hedge fund manager Dan Loeb has called for the breakup of insurance company Prudential after taking a near $2bn (£1.5bn) stake.
Loeb’s New-York based investment firm Third Point has built a five per cent stake in the insurance firm and is now pushing for it to separate its Asian and US operations.
It comes just months after the group spun off its fund management and European divisions, which began trading as M&G on the London Stock Exchange last October.
In a letter to the board, Third Point said separating the company’s Asian and US operations would “increase investment in both businesses, optimise growth, and drive higher valuation.”
Third Point, which has $14bn of assets under management, is now Prudential’s second biggest shareholder.
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The hedge fund added: “Prudential’s two separately managed franchises, Prudential Corporation Asia and Jackson National Life have distinct strengths but share no discernable benefit from being operated under the same corporate umbrella.”
Third Point has recommended that once the companies have been separated they should pivot from dividend growth to “long-term value creation”. The firm also urges the firm to eliminate group head office costs, which it estimates to be nearly £200m per year.
In a statement Prudential said: “Prudential confirms that it has today received a letter from 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.”
Loeb’s firm said it hopes to collaborate with Prudential and are confident that the majority of the insurance company’s shareholders will share its view.
Shares in Prudential were up 2.75 per cent at 8.30am.