Prudential has filed for a potential listing of its Malaysian unit as the insurer explores options to reduce its stake in the business, people with knowledge of the matter said.

The UK insurer submitted an application for an initial public offering of its local subsidiary with the Malaysian securities regulator last month, according to the people. A share sale could raise about US$700 million (S$957 million), one of the people said, asking not to be identified because the information is private.

Prudential has not decided whether to proceed with the listing, and it is still considering other alternatives like finding a buyer for a minority stake in the business, the people said.

Malaysia's central bank has been urging foreign insurers to reduce their holdings in local firms to no more than 70 per cent as it more strictly enforces ownership limits.

The regulator earlier gave overseas firms until June 30 to cut their holdings, people familiar with the matter said last year.

Singapore's Great Eastern Holdings and Japan's Tokio Marine Holdings were also among those weighing deals to reduce local stakes, the people said.

There is no certainty Prudential's deliberations will lead to any transaction, according to the people.

Prudential could wait until the new central bank governor takes office before deciding whether to proceed, one of the people said.

Datuk Nor Shamsiah Mohd Yunus, who was appointed to the post last week, begins her five-year term on July 1.

Prudential said in an e-mailed statement it abides by the local rules in the markets where it operates, and the company is "firmly committed" to serving the long-term protection and savings needs of the Malaysian people.

It declined to comment on any IPO plans.

BLOOMBERG