Prudential plc is to combine its asset manager, M&G, and Prudential UK & Europe (Prudential UK&E), to form M&G Prudential.
The idea said the company is to form a leading savings and investments business ideally positioned to target growing customer demand for comprehensive financial solutions.
The new business will manage over £332bn of assets for over six million assets in the UK and internationally. A statement from the company said that the investment and associated cost savings, will be shared between M&G, and Prudential UK&E’s with-profits and shareholder businesses. Shareholders are expected to contribute circa £250 million towards the investment and to benefit from cost savings of around £145m per annum by 2022.
As regards management, John Foley, currently Chief Executive of Prudential UK&E, will become Chief Executive of M&G Prudential and remains a member of the Prudential plc Board. Anne Richards will remain Chief Executive of M&G and a member of the Prudential plc Board. Both Anne Richards and Clare Bousfield, CEO Insurance for Prudential UK&E, will become Deputy Chief Executives of M&G Prudential.
Foley said: “I look forward to working with the teams across both sides of the business to develop the products and capabilities that will help us to continue to lead the fast-changing savings and investments market. Prudential UK&E and M&G both offer well designed solutions which help investors meet their most important financial goals. Combining their complementary strengths allows us to provide greater choice to a wider range of customers.”
Richards added: “This is an exceptional opportunity to bring together M&G’s extensive investment capabilities and Prudential UK&E’s expertise in balance sheet management. It will enable our investment teams to offer their expertise to a wider range of customers and across a broader range of investment and savings formats, while continuing to provide our current clients with the same high level of service.”
Prudential plc Group Chief Executive Mike Wells (pictured above) said: “M&G and Prudential UK&E have a long history of collaboration and we are fortunate to have two highly respected brands. Combining these businesses will allow us to better leverage our considerable scale and capabilities.”
“In recent years, we have seen a convergence in the investments and savings markets with customers across all geographies and demographics demanding more comprehensive solutions to their financial needs. Bringing together these two high-quality businesses, while transitioning to a capital-light model, will enable M&G Prudential to increase its growth prospects by providing better outcomes for our millions of customers and in turn generate strong returns for our shareholders.”
Peter Gray, partner and co-head of financial services at Cavendish Corporate Finance, commented: “The merger will create an investment management monolith with total AUM of £332 billion and combines M&G’s asset management expertise with Prudential’s experience in balance sheet management to create a powerhouse savings and investments business, which will satisfy the increasing demand from customers for comprehensive financial solutions.
“The deal reflects the continued trend of consolidation in the industry as firms seek to lower costs in the face of margin pressure precipitated by the increasing popularity of tracker funds.”