Prudential set to take its Egg to market in the second half

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The Independent Online

Prudential, the life insurer, will announce this week that it is planning to seek a stock market listing for Egg, its online bank, during the second half of the year.

Prudential, the life insurer, will announce this week that it is planning to seek a stock market listing for Egg, its online bank, during the second half of the year.

Analysts believe Egg could be worth £2bn-£4bn. Prudential, which reports its full year results on Wednesday, is likely to detail plans to float about 20 per cent of the online bank, which is estimated to have generated start up losses approaching £150m.

Jonathan Bloomer, the former finance director who takes over as chief executive from Sir Peter Davis on 1 March, is expected to finalise details of the float today and tomorrow. Goldman Sachs, the investment bank has been advising Prudential on a possible initial public offering.

Last week, the share price of the Halifax, the country's biggest lender, jumped 40 per cent after it outlined its internet strategy. Prudential stock gained 4 per cent last week to close at 981p, but the shares are below their recent high of 1186p reached earlier this year.

News of the float follows a major advertising blitz by Egg in the last few days. Over the weekend visitors to the Eggwebsite were able to purchase a Top 40 CD for £5.99, while holders of the Egg credit card will receive 5 per cent cash back for online purchases.

Since it was launched in 1998, Egg has grabbed market share from traditional banks by offering top rates on savings accounts and cut rate mortgages. Business figures released in mid-January showed that Egg has over 800,000 customers and has taken £7.6bn in savings deposits while lending out £600m in mortgages.

Wednesday's presentation to analysts and investors will also mark the final public appearance for Prudential by Les Cullen, its finance director, who joined the company last September. On Friday, Mr Cullen announced plans to step down from April after voicing discontent with the financial services industry.

Although institutional investors are likely to welcome afloat, Prudential is facing tougher competition and potential margin pressure from established UK financial services providers, which in recent weeks have moved aggressively to develop their own internet operations. It is expected that the float will be aimed primarily at institutional investors. Sources close to Prudential said the insurer is not planning a retail offer to target Egg's online customers.

Mike Harris, Egg's chief executive, is understood to welcome a stock market listing, as a key tool to attract and retain top staff. Quoted online companies can offer share options packages to attract talent, while internet businesses that remain inside large organisations can find it difficult to motivate staff.

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