Prudential delays capital rights issue

6 May 2010

Ongoing discussions between the Financial Services Authority (FSA) and Prudential have forced the insurer to delay a rights issue worth $21 billion.

The firm was expected to unveil a prospectus containing details on the rights issue on Wednesday morning (May 5th).

However, negotiations between the firm and the regulator are believed to have led to delays surrounding what will be the largest rights issue in corporate history if it goes ahead.

The $21 billion cash call is being launched to fund the Prudential’s $35.5 billion acquisition of the AIA Group, AIG’s Asian unit.

According to the firm, the delay will not affect the overall timetable mapped out for the acquisition.

Harvey McGrath, chairman of Prudential, said: “We are entirely committed to the transaction and remain on track to complete within the timing set out on March 1st.

"The work completed since March 1st with the AIA and Prudential teams has convinced me more than ever that the enlarged group will be in a position to capture sustainable and highly profitable growth and will deliver substantial long-term value for our shareholders."

Previous reports suggested that shareholders have been sceptical about the acquisition due to the size of the $35.5 billion deal.

Details of the bid were unveiled by Prudential chief executive officer Tidjane Thiam in March.

By Jim Ottewill

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