HONG KONG, Sept 18 (Reuters) - Prudential Plc <PRU.L>, Britain's second-largest listed insurer, expects to launch a fund business in the United Arab Emirates before year-end, the head of its Asian fund management arm said on Monday.
The operation would initially focus on selling Prudential's global fund products to investors in the region where high oil prices have swelled the asset pool, but could eventually evolve to manage assets locally, said Ajay Srinivasan, chief executive of Prudential's Asian fund business.
"We are in the final stages of our licence in the Middle East ... that would be the next geographic market that we would cover. We should have that operation up and running this year," he told Reuters in an interview.
"The initial phase is clearly around distribution."
He said Prudential's asset management joint venture in mainland China also plans to launch a second fund this year after it raised more than 3 billion yuan ($378 million) in April with its first product.
Prudential started its funds business in the region in 1998, when it bought a majority stake in Indian fund manager ICICI Asset Management. Srinivasan was appointed managing director of that business, before going on to become regional chief executive.
The Asian fund operation had $55.2 billion in assets under management as of June 30, up from about $46 billion a year earlier.



FOCUS ON RETAIL
The sources of the funds include Prudential's own insurance operations, both within Asia and in Britain, as well as retail investors.
Asia's retail investors, who put a smaller percentage of their savings into funds than European and U.S. investors, are likely to drive future growth as they become familiar with potentially higher return products like mutual funds, Srinivasan said.
"Our focus going forward is really how we can capitalise on the growing retail pools of financial assets that lie across different parts of Asia," he said. "The retail business is where we see the growth being faster."
Srinivasan said Prudential sees little need to expand beyond the nine Asian markets it operates in because those are where most of the region's assets are located. Its other Asian markets include Taiwan, Malaysia, Japan, South Korea, Hong Kong, Singapore and Vietnam.
Prudential entered Taiwan and South Korean through acquisitions. But Srinivasan said the firm is much more interested in internal growth the buying new business.
"I don't think we're saying we will not look at acquisitions, but clearly as of now, we have our own organic plans in place and the organic plans will hopefully take us upwards and forwards," he said.
Japan and South Korea are likely to generate the most assets in absolute terms in the next few years, but the rate of growth is likely to be highest in mainland China and India, he said.
Prudential and China's CITIC Group share control of Shanghai-based Citic Prudential Fund Management.
"We should have another product launch sometime this year. That is clearly something we would look to do," he said. He declined to give details.
Other growth opportunities in the region include the Hong Kong retail market. Prudential is considering launching its line of offshore funds into the territory, but does not yet have a specific plan, Srinivasan said. The firm has already partnered with Bank of China International to serve Hong Kong's Mandatory Provident Fund market.
It would also like to grow its Islamic finance business in Malaysia.
"We already have some capability for manufacturing Islamic products in Malaysia. We're looking now to make that one of our hubs for manufacturing Islamic products in the region," he said.
($1=7.942 Yuan)
((Editing by Jean Yoon; Reuters Messaging: jeffrey.hodgson.reuters.com@reuters.net; (852) 2843 6314))