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IFAs split on Cowdery’s Pru deal

Advisers are divided over whether a Resolution takeover of Prudential’s UK assets would be beneficial following reports that Resolution founder Clive Cowdery has secured funding for the deal.

Cowdery reportedly secured finance for the £5bn deal from the Royal Bank of Scotland and Royal Bank of Canada.

Last month, Prudential chief executive Tidjane Thiam admitted to holding talks with Cowdery over the sale of the insurer’s UK arm.

But analysts have suggested Pru would be unlikely to want to sell its UK division due to the effect this could have on its credit rating. Pru is seeking to hold a rights issue to raise the £21bn needed to fund the acq-uisition of AIA, the Asian arm US insurer AIG, with a prospectus published this week.

Prudential’s biggest shareholder Capital Group, which owns a 12 per cent stake, is thought to be looking to scupper the £23.5bn acquisition to break up the insurer.

Pension Transfer Solutions managing director Carl Melvin says: “Clearly, Pru needs cash and it sounds like Thiam is trying to sell quickly so it can buy AIA. Given the situation, Cowdery is not going to pay top dollar. I am concerned about whether a sale is in the best interests of UK shareholders and I suspect it is not.

“I expect Resolution would look to save money by downsizing in terms of staff cuts and closing offices, so I expect service in the UK would diminish and become even worse.”

Worldwide Financial Planning IFA Nick McBreen says: “I do not see any negative consequences of a Resolution acquisition, particularly if the structure is changed to improve the communication between Pru and its clients, which at the moment is terrible.”

Prudential, Resolution, the Royal Bank of Scotland and Royal Bank of Canada all declined to comment.


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