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M&G and Prudential to create £330bn asset manager

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UK insurance giant Prudential plans to combine its two main businesses to create a £332bn (€367.8bn) asset manager, the company announced today.

In a notice to the stock exchange this morning, the company said it wanted to merge Prudential UK & Europe – which manages with-profits funds and other savings accounts – with M&G, its wholly-owned asset management arm.

The new company, M&G Prudential, would be “better positioned to develop and fund joint product propositions and to build new digital service and distribution”, Prudential said.

“The new entity will combine M&G’s active investment expertise with Prudential UK & Europe’s capabilities in volatility-adjusted savings and liability-driven investment to provide more choice for customers across both brands through retail, institutional and direct channels,” the company said.

The merger would create one of the 50 biggest asset managers in the world, based on data from IPE’s 2017 Top 400 Asset Managers report.

M&G has offices in 12 European countries as well as the UK, and offers funds across multiple asset classes including fixed income, equity, real estate, and multi-asset.

Initial costs of the merger were estimated by Prudential at £250m, with roughly £145m annual savings expected by 2022.

John Foley, currently chief executive of Prudential UK & Europe, will take on the same role for the new entity, with M&G CEO Anne Richards becoming one of two deputies alongside Clare Bousfield, currently CEO for insurance for Prudential UK & Europe.

More details regarding the merger would be presented at Prudential plc’s investor conference on 16 November, the company said.

Mike Wells, Prudential group chief executive, said: “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.”

It marks the UK’s third major asset management merger in the past 12 months, and comes as the sector faces increasing cost and regulatory pressures. US group Janus Capital’s merger with Henderson Global Investors completed earlier this year, while Standard Life and Aberdeen Asset Management are due to complete their merger next week.

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