Few will blame investors that vote no

IF Tidjane Thiam manages to get the FSA to approve his hastily rewritten approach to capital levels, it will be a short-term reprieve for the man from the Pru. This deal is not out of the woods yet – it could easily fall apart at the last minute.

The main obstacle is the $21bn rights issue that Prudential desperately needs to complete before the $35.5bn takeover of AIA goes ahead. Due to the sheer size of the fundraising, Thiam must get a “supermajority” of 75 per cent of shareholder support. That is looking increasingly unlikely. Some large shareholders are even said to be building up their stakes, just so they can try and defeat the rights issue.

Who can blame them? To describe this deal as a “shambles” is an understatement. Management has conducted itself haplessly from start to finish. It let news of the rights issue leak out before talking to institutional investors; it let Societe Generale announce Thiam as a new board member while he was trying to navigate a huge deal; and it failed to dot the ‘i’s and cross the ‘t’s with the FSA vis-a-vis capital levels.

These blunders are unforgivable. Few will blame those investors that try to vote the rights issue down.