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Pru looks to raise £1bn to put AIA deal back on table

Prudential may be close to salvaging its £23.5bn takeover of AIG’s Asian arm by negotiating a deal to placate FSA concerns over capital adequacy.

The company was forced to delay the launch of its rights issue, scheduled for May 5, as the FSA blocked the prospectus for its £14bn rights issue on the grounds that the merged company would be short of capital.

Prudential is expected to announce details of an agreement this week, which could include a £1bn backstop fund to meet the regulator’s concerns over capital reserves as well as a rejig of the details of its funding for the AIA deal.

The firm is likely to go to investors to raise the £1bn so-called Armageddon fund.

The news comes as already disgruntled shareholders, including Neptune chief executive Robin Geffen, continue in a bid to scupper the deal and oust chief executive Tidjane Thiam over concern that the insurer’s future could be at risk.

Prudential’s biggest shareholder Capital Group, which owns a 12 per cent stake, was also looking to derail the acquisition by seeking a break-up of the insurer, while Legal & General is the latest shareholder to raise concerns. It is reportedly calling on the firm to renegotiate a better price with AIA.

Last week, Prudential announced it was revising its plan to list on the Hong Kong and Singapore stock exchanges after the FSA put the brakes on the Asian acquisition.

Resolution founder Clive Cowdery has reportedly secured finance from the Royal Bank of Scotland and the Royal Bank of Canada to fund a bid for Prudential’s UK assets.


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