Prudential embraces vertical integration with M&G merger

Prudential is set to embrace vertical integration as it plans to merge its asset manager M&G with its wider UK and Europe business.

The new business will be called M&G Prudential, and would manage more than £332bn of assets as it stands.

The firm is looking to generate a £250m cash injection from shareholders for investment, and is expecting to make £145m a year cost savings by 2022.

Prudential UK and Europe chief executive John Foley will lead the new business.

Current M&G chief executive Anne Richards will share the deputy chief executive role at the combined firm with Prudential’s insurance chief executive Clare Bousfield.

Foley says: “I look forward to working with the teams across both sides of the business to develop the products and capabilities that will help us to continue to lead the fast-changing savings and investments market. Prudential and M&G both offer well designed solutions which help investors meet their most important financial goals. Combining their complementary strengths allows us to provide greater choice to a wider range of customers.”

The move echoes Standard Life’s recent strategy, which launched a financial advice business and then brought additional investment management business into the fold with the acquisition of Aberdeen Asset Management.

The likes of Sanlam, which announced the acquisition of advice network Tavistock earlier today, it also hoping to leverage its existing investment capabilities to grow a vertically integrated business.

Prudential has also been building out its advice business, Prudential Financial Planning, in recent years, and has around 300 advisers now on its books.

In a statement today, Prudential group chief executive Mike Wells noted this trend towards vertical integration.

Wells says: “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.”