Wednesday, August 12, 2020

KAPITAL FLIGHT
Prudential slashes dividend as it retreats from the US: Insurer to focus on fast-growing markets in Asia and Africa
TRUMP SCARES FINANCE CAPITAL OFFSHORE
Insurance giant Prudential slashed the dividend in half as it announced plans to spin off its American business.

The FTSE 100 firm plans to float a minority stake in Michigan-based Jackson National Life, before gradually selling the rest of its holding over time.

Bosses said the shake-up will allow the Pru to focus on fast-growing markets in Asia and Africa.



Prudential plans to float a minority stake in Michigan-based Jackson National Life, before gradually selling the rest of its holding over time

But the company is cutting its prized dividend as part of the changes, to give it extra firepower to invest in Asia and enable Jackson to build up its own cash reserves before separation.


It is a blow to savers and pension funds who rely on dividends for income. The Pru is traditionally one of the top-20 dividend UK payers.

Other firms that have slashed their payouts include BP, Shell, HSBC, Lloyds Bank, Glencore and Aviva.


The small number of companies that kept their divis includes Legal & General, Standard Life Aberdeen and Unilever.

Pru boss Mike Wells said: 'To support the separation process Prudential will adopt a new dividend policy that is aligned to the Asia and Africa growth strategy and to the intended separation of Jackson.'
It is the second major upheaval announced by the Pru in as many years. In 2018, the British firm revealed plans to spin off UK business M&G into a separate listed company and the split took effect last October.

Jackson will be separated as well – but listed in the US, where it is expected to float next year.

The rest of the Pru's business will be based in London and it will keep its primary listing on the London Stock Exchange.
Wells said the 'rebalancing' of investments with the dividend was aimed at delivering strong growth and bumper profits in the long run.

The Pru declared a half-year dividend of 5.37 cents (4.1p) per share, 56 per cent down from the previously expected payout of 12.28 cents (9.4p).

445 firms who have cut their payouts


A total of 445 companies cut, cancelled or hit the pause button on dividends between January and late July, figures show.

Firms of all sizes desperately tried to rein in spending at the start of the pandemic. But this has been dire for pensioners, savers and retail investors as they have been deprived of a key source of passive income.

Fifty firms in the FTSE 100, 108 in the FTSE 250 and 89 small-caps were among those who suspended, trimmed or scrapped shareholder payouts between January 1 and July 24, according to exchange-traded fund provider Granite Shares. Some 139 companies on AIM also axed their divi.

On the Footsie, oil majors BP and Royal Dutch Shell made cuts, and Lloyds Bank, Barclays and Rolls-Royce have added to the misery.

Firms including Rio Tinto and BAE Systems are among those to have increased their payouts.

It expects to pay another 10.70 cents (8.2p) per share later in the year, taking full-year payouts to about 16.10 cents (12.3p) – worth £321million overall.

Wells said the divi would rise 'broadly in line with the growth in Asia'.

Pru shares rose 2.8 per cent, or 35p, to 1267p yesterday.

The fresh break-up is a victory for Third Point, the aggressive US hedge fund run by corporate raider Dan Loeb, which built up a stake of 5 per cent and demanded it separate Jackson.

Loeb also called for the Pru to scrap its UK base to save costs –something it has refused to do.

Wells said that the Pru is 'committed' to the City but will make its base more 'cost-effective', as it looks to save £53million a year by 2023.

He declined to say how many jobs at the HQ, where some 200 people are employed, are at risk but said the office would be 'appropriately-sized'.









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