Prudential (PRU.L) is expected to get a warm welcome from Hong Kong and Singapore investors when its shares start trading on Tuesday, helped by its strong brand name and pan-Asian presence. 

Granted, like any public listing, the newly public shares will be at the mercy of the market. 

 

But even as Western fund managers fret about the risks involved in the UK insurer’s US$35.5 billion ($50 billion) acquisition of AIA, the Asian life insurance arm of AIG (AIG.N), many in Asia see an opportunity to buy into a company that be a regional behemoth. 

 

Despite the risks of the takeover failing, Asian retail and institutional investors alike recognize that buying into Pru will also be buying into AIA, a widely recognized name throughout the region. 

 

“The Prudential listing will be popular among retail investors. There’s the strong brand name and it’s very visible,” said Moh Tze Yang, lead analyst at SIAS Research, the research arm of the Securities Investors’ Association of Singapore. 

 

The enlarged Prudential, with AIA in its fold, offers investors exposure to many Asian markets, unlike Chinese insurers listed in Hong Kong which are pure-China plays, he said. 

 

How the listings trade at first should be similar to any new offering, in that if overall market sentiment is strong that day, the stock should trade up. If sentiment is weak, it won’t. The underwriters are allowed to provide liquidity for the shares when they open. 

 

The IPOs on Tuesday will be by introduction, a process in which the company does not actually raise money by pricing shares. Instead, it’s a transfer of shares, in this case, with around US$100 million converted already from its London listing. 

     

Pru Chairman Harvey McGrath will be on Hong Kong on Tuesday for the listing. 

 

Asian institutions have also been supportive of Prudential’s US$21 billion rights issue — with Singapore’s giant sovereign wealth fund GIC (GIC.UL) acting as one of the underwriters, and Hong Kong billionaires Li Ka-shing and Cheng Yu-tung indicating interest in buying the shares. 

 

SIAS is recommending investors pay up to $2.50 — or about 123 pence — for the rights, valuing Prudential at around 227 pence after the issue. 

 

Prudential, which closed at 516.5 pence a share on Thursday, is theoretically worth 167 pence a share once its ongoing rights issue of 11 new shares at 104 pence apiece for every two existing shares is completed. 

 

According to Prudential, the absorption of AIA will make it the largest life insurer in Hong Kong and Southeast Asia. The combined group will also be the biggest foreign insurer in China and India, with substantial operations in the United States and Britain. 

 

In contrast, Hong Kong-listed insurers China Life (2628 .HK), China Pacific (601601.SS) (2601.HK) and Ping An Insurance (2318.HK) have few businesses outside China. Singapore-listed Great Eastern Holdings (GELA.SI), the insurance arm of Oversea-Chinese Banking Corp (OCBC.SI), is present mainly in Singapore and Malaysia. 

 

Despite the expected support from Asian investors, Prudential will have its work cut out to justify what some see as the high price it paid for AIA.