PRUDENTIAL kicked off a second round of meetings with its largest UK investors yesterday, in a move to smooth ruffled feathers after shareholders opened fire on the insurer last week.
Chief executive Tidjane Thiam met with a number of fund managers in London to cement their support for Prudential’s $35.5bn (£23.5bn) buyout of American International Group’s pan-Asian network.
Shareholders have complained about the lack of detail surrounding the $20bn rights issue planned to part-fund the acquisition, and were irked when it emerged Thiam intended to take a board role at French bank Société Générale during the deal. Thiam was forced to pull out of the SocGen appointment last Thursday.
In discussions with major investors yesterday, Thiam said the post-merger business would deliver earnings enhancement within two to three years. He believes the productivity of AIA’s operations, which span from South Korea to Thailand, can be greatly improved.
Oriel Securities analyst Marcus Barnard said investors were baulking at AIA’s price tag rather than Asia’s growth prospects. “You’re paying twice book value by issuing shares at a 40 per cent discount, so this is a highly dilutive deal,” he said.
One fund manager was worried Prudential’s dividend growth would be sacrificed in the short term.
But Martin Brown of Ignis Asset Management, which owns a significant stake in Prudential, said institutions needed to take a longer-term view of the transaction. He said: “Having met with Tidjane, I’m broadly supportive of the deal. We had a positive meeting and I certainly didn’t come away thinking I’d been sold short by the management team.”
Thiam will fly to Asia later this week to secure the blessing of Chinese and Hong Kong regulators before meeting Asian investors.