Shares of British insurer Prudential Plc <2378.HK> fell in early trade in a weak Hong Kong market after debuting at HK$59.70 ($10.78), consistent with their London close.

The listing of Prudential <PRU.L><PRTL.SI> shares in Hong Kong and Singapore is by way of introduction, which means some of the existing London-listed shares are converted to be eligible for trading in Asia. Hence, the move does not raise any new capital.
 

Prudential, which is buying American International Group Inc's <AIG.N> Asian life insurance business for US$35.5 billion ($50 billion), aims to raise US$21 billion from a rights offering to fund the biggest insurance deal in history.

Listing shares in Hong Kong and Singapore is aimed at winning support from Asian investors, who are expected to be key to the success of the rights issue.

The Hong Kong shares opened at HK$59.70, based on Prudential's London-listed shares close of 530.00 pence on Monday, according to a Hong Kong stock exchange release.

By 10:52 a.m., Prudential shares were trading at HKD $58.80 tracking an almost 2% fall in the benchmark Hang Seng Index <.HSI>. Traded volume in the first 20 minutes was about HK$10 million.

Prudential’s bankers, Credit Suisse <CSGN.VX>, HSBC Holdings <0005.HK> <HSBA.L> and JP Morgan Cazenove, are responsible for providing ample liquidity for the stock in the initial days of trading.

Prudential, with a market value of US$19 billion, has converted 50.97 million shares from London in the first batch to be traded in Hong Kong, or about 2.01% of its total issued share capital.

Prudential is facing opposition to its planned takeover of American International Assurance, with some shareholders questioning the price the firm is paying to transform into an insurance behemoth in Asia.

“The response is constructive ... the vast majority of shareholders are comfortable with the AIA transaction,” McGrath told reporters after the listing of Prudential shares on the Hong Kong stock exchange.

Despite the risks of the takeover failing, Asian retail and institutional investors alike recognised that buying into Prudential would also be buying into AIA, a widely known name in the region.

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

According to Prudential, absorbing AIA would make it the largest life insurer in Hong Kong and Southeast Asia. The combined group would 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.