RealTime IT News

Prudential Sends Egg Stake Out of the Nest

Prudential plc Wednesday introduced IPO plans for its online banking service, egg, which has swept the British Isles by storm.

Prudential will float a minority stake in its first-to-market banking wonder, with the offering of an estimated 15 to 25 percent according to reports. The IPO is expected to take place later this year, and will extend the offering to egg customers who enrolled by midnight on February 22, among other criteria.

The service, which Prudential hailed as "one of the UK's most recognised e-commerce brands," listed a customer base of more than 800,000 and deposit funds of £7.6 billion ($12.2 billion) for 1999. Prudential said egg's growth had vastly exceeding its targets, despite a loss of &$163;150 million ($240 million) last year and £77 million ($124 million) the year before. The company expects similar loss levels for this year, but sees a profit in 2001 through a substantial customer base and cross-buying programs.

egg's success has drawn a slew of new competitors to the field -- several similar services are in the preliminary launch stages, including Abbey National plc and Halifax's esure. Abbey put aside £ million ($262 million) for e-commerce services last year, to be spent over the next three years.

Prudential also said that its online unit trust supermarket, which is intended to provide egg customers access to investment funds and online brokerage services, is now in the pilot stage.

The insurance major said that the IPO plans would encourage development and financial flexibility for egg, as well as lend the online bank ammunition for potential acquisitions. Prudential also expects to reap long-term shareholder value through the move, which could soften the blow of this year's 10 percent fall in operating profits.