Prudential's last-ditch grasp for Asian market
PRUDENTIAL will make a last-ditch attempt to win over investors this week as it prepares to relaunch its £24bn offer for AIG's Asian arm.
Britain’s biggest insurance firm will publish a 1,000-page prospectus to back up the £14bn share issue required to fund the deal for AIA.
The document was delayed two weeks ago after the Financial Services Authority raised concerns about the capital strength of the enlarged company.
The Pru has restructured the deal following the regulator’s intervention, but it still needs to win over key investors amid worries in the City that the planned move is too risky and too expensive.
The tie-up, which requires the support of 75% of shareholders, will make it the largest insurer in Asia and the world’s biggest life assurer outside China.
The Sunday Times said this week’s document is expected to reveal that the underlying value of AIA has soared since the takeover was announced two months ago.
It will also hint at plans to dispose of the group’s British and American operations, although neither business will be sold before the deal completes.
The delayed rights issue, which will be the largest in UK corporate history, has heaped pressure on chief executive Tidjane Thiam and chairman Harvey McGrath.
Mr Thiam has described the deal as a “one-off opportunity“.
Analysts expect the offer price for the new shares to be set at about 140p, a 40% discount to the prevailing market price and a 75% discount to the closing price before the deal was announced. The group’s AIA takeover will mean the Asian operation becomes by far the Pru’s biggest division – contributing around 60% of new business profit.
It will give the company some 30 million customers in total across Asia, compared with around seven million customers in the UK.
AIG, which is now controlled by the US government after a US$182bn (£120bn) rescue amid the financial crisis, will retain a stake in the Pru as part-payment for its Asian business AIA.
AIA employs around 320,000 agents and 23,500 employees and services markets across 15 Asian markets.