Prudential storms into Hong Kong

Prudential’s vote of confidence in Hong Kong has lifted sentiment. Lawyers speak to China Business Law Journal about the city’s future as a business and legal hub for China and Asia

By Robin Weir

All eyes were on Hong Kong on 1 March, as UK insurance company Prudential sealed a US$35.5 billion deal to buy AIA, the Hong Kong-based subsidiary of troubled US insurer AIG. After the acquisition, Prudential will be the leading life insurer in Hong Kong, Singapore, Malaysia, Indonesia, Vietnam, Thailand and the Philippines, and the leading foreign life insurer in India and China.

AIA’s home base, Hong Kong, has been central to the deal. In accepting the terms of Prudential’s offer, AIA’s parent company, AIG, abandoned advanced preparations for an initial public offering of AIA on the Hong Kong Stock Exchange. Prudential, in turn, announced its intention to seek a dual primary listing in Hong Kong, to complement its listing in London. The planned Hong Kong listing is clearly intended to encourage Asian investors to buy into Prudential in advance of a rights issue it will launch to fund the AIA acquisition.

For business growth tomorrow, and access to capital today, Prudential is coming to Hong Kong. And so is Michael Geoghegan, the chief executive of the Hong Kong and Shanghai Banking Corporation. HSBC announced Geoghegan’s his move from London to Hong Kong in September last year. Symbolically, at least, his relocation reverses HSBC’s decision to move its global headquarters from Hong Kong to London in 1993.