Prudential to split off U.S. business Jackson, eyes $2.5-3 billion capital raise

[January 28, 2021]  LONDON (Reuters) - British life insurer Prudential said on Thursday it would separate its U.S. business Jackson through a demerger to better focus on Asian and African markets, while adding it was considering raising $2.5-3 billion in new equity.

Prudential, under pressure from activist investor Third Point, had originally planned a minority initial public offering of the U.S. business.

It said in a statement that a demerger would allow a quicker separation than a minority IPO and future sell-downs.

Prudential CEO Mike Wells said the demerger would "significantly accelerate Prudential's transformation into a business purely focused on profitable growth in Asia and Africa".

Shares fell sharply after the announcement and were down 8.9% at 0904 GMT.

The company said shares in Jackson would be distributed to Prudential shareholders after the demerger, which is expected in the second quarter of 2021.

Following the demerger, Prudential said it would retain a 19.9% non-controlling interest in Jackson.

Prudential said operating results for 2020 were anticipated to be in line with market expectations, ahead of its full-year earnings announcement on March 3.

Shares in Prudential were down 5% at 0854 GMT.

(Reporting by Muvija M in Bengaluru and Carolyn Cohn in London; Editing by Rachel Armstrong)

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