E fund Lansdowne Partners has doubled its short position in Prudential to 0.88 per cent or £121m, betting the insurer’s shares will fall.
Analysts said there were several possible motives behind the move. Lansdowne could be counting on Prudential’s record $20bn (£13bn) rights issue going ahead successfully, in which case the share price would stabilise at a lower level. The hedge fund could also be planning to arbitrage unwanted rights from other investors or covering a long position in another insurance company.
Prudential is in the middle of a $35.5bn takeover of AIA, the Asian unit of AIG. The rights issue prospectus is due on 5 May, with investors voting on the takeover on 27 May.
A report yesterday suggested Prudential’s largest shareholder, US-based Capital Research & Management, was sceptical of the deal and had held talks with a financial firm with a view to launching a break-up bid for the British company.
Capital Research said it would not comment on portfolio holdings, while Prudential said it would not comment on “market speculation”.