The Investment Column: Prettejohn will find Prudential in good shape

Doubts over deal for TroVax mean it's time to sell out of Oxford BioMedica; Restructured and renamed, the old Ofex market is well worth backing
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The Independent Online

At first sight, Nick Prettejohn looks to be in for another tough recovery job after agreeing yesterday to join Prudential as chief executive of its UK operations. Mr Prettejohn has spent the past 10 years at Lloyd's of London - as chief executive since 1999 - where he helped restructure the insurance market after its disastrous losses of the early Nineties and then led it through the 11 September terrorist attacks and a series of natural disasters.

Now he must step into the shoes of Mark Wood, who is leaving the Pru after failing to bag the top job when Jonathan Bloomer, the former group chief executive, was ousted earlier this year. The new UK boss is the first senior hire by Mark Tucker, who took over as chief executive in May, and who is due to announce the results of a strategic review of the company later this month.

But Mr Prettejohn may be pleasantly surprised by the contents of his in-tray. Far from being the basket case that some of Pru's critics have sought to portray, the insurer is actually in pretty good shape.

Mr Prettejohn faces two immediate challenges. First, he must work with his new boss to decide on the fate of Egg, the online bank in which the Pru holds a 79 per cent stake. Although the Pru's failure to sell Egg has been embarrassing, the bank is now just about turning a profit and is well regarded by customers. It may yet prove a significant asset.

The second task is to get the Pru back to its pre-eminent position in the UK's savings and investment sector. Here too, the signs are encouraging. In a country in which an ageing population is forced to save more by a government keen to trim its social security budget, the financial services sector must be a long-term winner. And Pru is one of the few life insurers with sufficient scale to provide products to every section of the market.

It is already doing so: its with-profits investment returns are among the strongest in the industry and Pru has launched several innovative new savings plans over the past 12 months. Since last year's £1bn rights issue, it is well funded for the necessary expansion. It is also well-placed to benefit from reforms that will enable it to distribute more products through banks and building societies.

Mr Prettejohn's new role may therefore prove less taxing than expected, and Mr Tucker will also be pleased that Pru's US and Asian businesses continue to perform well. There may well be disappointments in individual Asian markets, but the overall picture is of an emerging markets business that is racing towards self-funding growth.

Prudential is a member of The Independent portfolio of tips for 2005 and the shares are up 7 per cent since the start of the year. There is more to come. Buy.

Doubts over deal for TroVax mean it's time to sell out of Oxford BioMedica

Oxford BioMedica is one of the UK's most interesting biotech companies, conducting trials of what could be revolutionary treatments for cancer. It has an army of private investors on its shareholder register, and a cascade of positive news announcements has attracted even more speculators in recent months. It is time to sell.

OXB was formed a decade ago as a spin-out from Oxford University by Alan Kingsman, the professor who is still its chief executive, and his wife Susan, its chief scientific officer. The company believes it can reverse tumour growth using a genetically modified virus to help the human immune system, and is conducting trials in colorectal, renal and breast cancers.

There was more news from one of those trials yesterday, the latest in a string of moderately positive, but inconclusive, releases - a colorectal cancer trial involving 23 patients on chemotherapy and TroVax, OXB's most advanced drug. There was no chemo-only control group of patients, so we can tell little about TroVax's part in the positive tumour responses found in most patients, and the small study size would make statistical significance unlikely anyway.

A bigger trial is needed. OXB says it is talking to some of the world's big pharmaceuticals companies in the hope that they will be sufficiently excited to help fund it. But significantly yesterday, Professor Kingsman said he planned to sign a deal "within the next 12 months", dashing hopes of a deal in 2005. It seems increasingly likely that partners may want more data or an improved version of the drug before signing.

Restructured and renamed, the old Ofex market is well worth backing

The soaraway success of the Alternative Investment Market, the London Stock Exchange's market for growth companies, has put poor old Ofex in the shade. This independent stock market for small companies nearly went bust last year as new and existing stocks preferred to list on AIM. Simon Brickles, the man who led AIM until 2003 and is credited with sowing the seeds of its present success, has been drafted in to work the same magic at Ofex, but it took last year's calamity for him to wrest full operational control from Ofex's founding Jenkins family. Now renamed Plus Markets, the shares exchange is going places again, and investors with an appetite for risk should join the list of City names to put their money behind Mr Brickles and the new Plus Markets strategy.

Plus is creating a second market for small companies already listed on the LSE. What is the point of that? Well, the LSE has recently switched some small stocks to an electronic trading system that has not gone down well with old-fashioned brokers, who want to deal personally with a market maker. Trading on Plus will also be cheaper. It is a good wheeze and ought to attract more interest in the core Ofex market, too. With its financial worries behind it, Plus Markets is a buy.

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