PRUDENTIAL boss Tidjane Thiam formally embarked on his make-or-break bid for AIA in Asia yesterday as he unveiled a heavily discounted $21bn (£14bn) rights issue.
One investor remarked the market had “squeezed” Prudential into offering 11 shares for every two shares held at 104p, a gaping 81 per cent discount to Friday’s closing price of 542.5p. The insurer also sugared the pill for institutional shareholders by offering them a chunky two per cent fee to sub-underwrite the cash call.
The stakes are high for Thiam, who will almost certainly be forced to resign if Prudential fails to get 75 per cent backing from investors for the rights issue at the 7 June vote. Chairman Harvey McGrath refused to back his chief executive in the event of the fundraising collapsing yesterday, saying: “We will take a view of the situation as and when it unfolds.”
Prudential bolstered its case for the $35.5bn takeover of AIA by releasing improved first quarter numbers from the Far Eastern division of AIG. Pre-tax profits were up 32 per cent to $198m on sales growth of 16 per cent.
At Prudential’s own operations, new business profit was up 27 per cent to £427m although fund inflows were 56 per cent lower at £1.2bn.
Martin Brown, an investor at Ignis Asset Management, said: “The number of ‘yes’ votes [for the rights issue] will have increased.”