The Prudential was once one of the most famous and trusted brands in Britain. The ‘man from the Pru’ was a loved figurehead for the company. Recently the company’s image has been more than somewhat tarnished and its worth diminished on the stock market.

It is possible that Ping An, the second largest insurer in China, is preparing a move on Britain’s second biggest insurance company.

The Chinese company has raised £11bn in the country’s biggest share sale to help it finance a foreign acquisition strategy, and it has Prudential firmly in its sights because of its extensive Asian interests.

It is unlikely that it will be a bid for 100% of the company but Ping An could take a strategic stake and use it as a base to move in on some British finance houses.

The rise of state-backed foreign enterprises or sovereign wealth funds (SWFs) is impacting most on debt-laden western economies, ready and able to unleash serious money to buy a share in world trade.

With investors in short supply due to the credit crisis, balance sheets under pressure and stock markets taking a tumble, many western companies have been forced to look east for finance, and to these giant funds in particular.

According to a report from Asia-oriented bank Standard Chartered, these SWFs already hold $2.2 trillion and this could reach $13.4 trillion over the next 10 years.

Asians divide opinion between those who see them as saviours and those for whom they are a threat to national security. Up to now, western companies have been happy to take the money on offer so long as the investors keep their holdings to a relatively minor stake, typically no more than 10%.

Gerard Lyons, group head of global research at Standard Chartered, said, ‘A protectionist backlash against strategic investments is real and threatens global trade. We are more likely to see western governments seeking to protect national champions and strategic sectors. Already this is happening in the US, with more signs of a hardening of stances across Europe.’
Source: Scotsman