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Pru faces growing rebellion

PRUDENTIAL’S quest to buy AIA is turning into “a high-stakes gamble”, one major shareholder said last night, as it emerged 15 per cent of investors may vote against the deal.

Referring to the insurer’s plan to take over AIG’s Asian arm for $35.5bn (£25bn), the top-20 shareholder said: “There are a number of issues you could point out to highlight the risks in this thing. The deal is increasingly looking like a high-stakes gamble.”

Prudential is trying to woo investors to support the acquisition, which will be part-funded by a $21bn rights issue. The company needs to secure 75 per cent of its holders’ approval at a meeting on 7 June.

But after a series of management gaffes, Prudential yesterday endured a note from the influential advisory body RiskMetrics urging investors to vote against the merger. The Association of British Insurers, whose members own nearly a fifth of the London stockmarket, also issued an “amber top” alert saying investors should give “careful consideration” to elements of the deal.

Robin Geffen of Neptune Investment Management, who owns a small stake in Prudential and is campaigning against the AIA takeover, said institutions representing 15 per cent of Prudential’s stock had pledged to vote down the proposal next month. “The number of people coming out to vote ‘no’ is definitely increasing,” he said.