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<TABLE border=0 cellSpacing=0 cellPadding=0 width=452><TBODY><TR vAlign=top><TD></TD></TR><TR><TD vAlign=top width=452 colSpan=2>Published March 10, 2010
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Prudential's listing in HK raises questions about S'pore
Two factors could account for insurer giving SGX a miss
By MICHELLE QUAH
(SINGAPORE) Prudential's surprise announcement that it will list in Hong Kong, following its US$35.5 billion decision to buy over rival AIG's Asian operations, has led market watchers here to wonder why the UK life assurance giant did not pick Singapore instead for its secondary listing.
Prudential said on Monday that it is bringing forward its planned second listing to April, so that it will now come before its US$20 billion rights issue, and that the listing will be in Hong Kong.
The accelerated listing is seen as Prudential's attempt to shore up its shares ahead of the rights issue - and it will also assuage angry shareholders who worry their stakes will be diluted by the massive rights issue. Some 30 banks and sovereign wealth funds - including the Government of Singapore Investment Corp (GIC) - are on the underwriting syndicate for the rights issue.
But GIC's involvement, and the decision to list in Hong Kong, has led some to question why Prudential didn't look to Singapore instead.
Longtime investor, Denis Distant, in a letter to BT, asked why Prudential chose to give preference to Hong Kong, 'when just a few days earlier they got a commitment from Singapore's GIC to assist in a substantial way in the financing of their bid for AIG's Asian unit'.
'As a Singaporean I would expect a quid pro quo, naturally,' he said.
There is a short answer and a longer one.
The short answer is, there cannot be a quid pro quo, in the sense Mr Distant is suggesting, because GIC does not invest in Singapore entities. Its latest report says: 'GIC invests well over US$100 billion internationally in a wide range of asset classes and instruments. It invests only outside Singapore.'
This suggests that GIC would not have chosen to underwrite Prudential's rights issue - and potentially own a stake in it - if the life insurer had intended to list in Singapore.
The longer answer, as to why Prudential chose Hong Kong over Singapore, goes to the heart of what seems to be a growing perception among potential listees and market players alike - ie the valuations in the Hong Kong market versus Singapore's.
'The large listings from China have chosen to go to Hong Kong because the market there clearly has the capacity to absorb them,' observes NetResearch Asia's executive chairman Kevin Scully. 'The valuations in Hong Kong are just better.'
The Wall Street Journal's Hester Plumridge has noted that a Hong Kong listing - and an accelerated one at that - would help to support Prudential's share price between now and the rights issue. 'Investor demand for recent dual Hong Kong listings has been high; Singapore-listed China XLX Fertiliser's shares doubled on the day of their Hong Kong debut in December. Given that Prudential shares are down 14 per cent since the AIA announcement, the insurer will be hoping Hong Kong investors retain their exuberant appetite for risk,' Mr Plumridge said.
AIA, the Asian business of the embattled US insurance giant AIG, had also been planning a Hong Kong float before Prudential's bid. Prudential is hoping that the investors keen on AIA's initial public offering would now look to its listing.
The Financial Times cited people close to the deal as saying that plenty of Asian investors, many of whom were being lined up for the initial public offering of AIA, are keen to invest in the combined group.
Marcus Barnard, analyst at Oriel Securities, told FT: 'While (the dual listing) does not offer instant additional liquidity, it does mean that any selling of the shares in London could be more easily taken up by finding new investors in Hong Kong.'
Prudential has said that it is not going to offer new ordinary shares in Hong Kong, but Asian investors who buy the Hong Kong listed shares will be able to participate in the rights issue.
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</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Prudential's listing in HK raises questions about S'pore
Two factors could account for insurer giving SGX a miss
By MICHELLE QUAH
(SINGAPORE) Prudential's surprise announcement that it will list in Hong Kong, following its US$35.5 billion decision to buy over rival AIG's Asian operations, has led market watchers here to wonder why the UK life assurance giant did not pick Singapore instead for its secondary listing.
Prudential said on Monday that it is bringing forward its planned second listing to April, so that it will now come before its US$20 billion rights issue, and that the listing will be in Hong Kong.
The accelerated listing is seen as Prudential's attempt to shore up its shares ahead of the rights issue - and it will also assuage angry shareholders who worry their stakes will be diluted by the massive rights issue. Some 30 banks and sovereign wealth funds - including the Government of Singapore Investment Corp (GIC) - are on the underwriting syndicate for the rights issue.
But GIC's involvement, and the decision to list in Hong Kong, has led some to question why Prudential didn't look to Singapore instead.
Longtime investor, Denis Distant, in a letter to BT, asked why Prudential chose to give preference to Hong Kong, 'when just a few days earlier they got a commitment from Singapore's GIC to assist in a substantial way in the financing of their bid for AIG's Asian unit'.
'As a Singaporean I would expect a quid pro quo, naturally,' he said.
There is a short answer and a longer one.
The short answer is, there cannot be a quid pro quo, in the sense Mr Distant is suggesting, because GIC does not invest in Singapore entities. Its latest report says: 'GIC invests well over US$100 billion internationally in a wide range of asset classes and instruments. It invests only outside Singapore.'
This suggests that GIC would not have chosen to underwrite Prudential's rights issue - and potentially own a stake in it - if the life insurer had intended to list in Singapore.
The longer answer, as to why Prudential chose Hong Kong over Singapore, goes to the heart of what seems to be a growing perception among potential listees and market players alike - ie the valuations in the Hong Kong market versus Singapore's.
'The large listings from China have chosen to go to Hong Kong because the market there clearly has the capacity to absorb them,' observes NetResearch Asia's executive chairman Kevin Scully. 'The valuations in Hong Kong are just better.'
The Wall Street Journal's Hester Plumridge has noted that a Hong Kong listing - and an accelerated one at that - would help to support Prudential's share price between now and the rights issue. 'Investor demand for recent dual Hong Kong listings has been high; Singapore-listed China XLX Fertiliser's shares doubled on the day of their Hong Kong debut in December. Given that Prudential shares are down 14 per cent since the AIA announcement, the insurer will be hoping Hong Kong investors retain their exuberant appetite for risk,' Mr Plumridge said.
AIA, the Asian business of the embattled US insurance giant AIG, had also been planning a Hong Kong float before Prudential's bid. Prudential is hoping that the investors keen on AIA's initial public offering would now look to its listing.
The Financial Times cited people close to the deal as saying that plenty of Asian investors, many of whom were being lined up for the initial public offering of AIA, are keen to invest in the combined group.
Marcus Barnard, analyst at Oriel Securities, told FT: 'While (the dual listing) does not offer instant additional liquidity, it does mean that any selling of the shares in London could be more easily taken up by finding new investors in Hong Kong.'
Prudential has said that it is not going to offer new ordinary shares in Hong Kong, but Asian investors who buy the Hong Kong listed shares will be able to participate in the rights issue.
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