Three banks doing Prudentials $21 billion rights issue will share a jot down $600 million in fees, it emerged yesterday, as the insurer cumulative a transforming takeover to turn the largest general player in the Asian markets.
Credit Suisse, JP Morgan Cazenove and HSBC will take the lions share of the $1 billion costs compared with the Prus money call, the largest in history.
The fundraising forms piece of the Prus $35.5 billion merger of AIA, the Asian multiplication of AIG, that was reliable yesterday. The deal, some-more than fifteen months in the making, is the greatest takeover of an Asian association by a British predator and the largest understanding ever finished by an word group, heading AIGs $22.7 billion understanding for American General in 2001.
As piece of the financing for the takeover, the Pru will issue $10.5 billion of new shares to AIG, giving the US Government an surreptitious interest in the company. AIG is 80 per cent-owned by the US Government after a $182.5 billion bailout in 2008. AIG will finish up owning an eleven per cent interest in the sum group, apropos the largest shareholder. Pru will pretence a serve $5 billion in debts, handing AIG a sum of $25 billion in money for AIA on tip of the shares.
Related LinksBumper year for Britains �10m bankerPrudential shares tumble on $35.5 billion Middle East dealPru creates grab for AIGs Asian armThe merger gives the Pru a No 1 on all sides in 7 Asian markets, together with Hong Kong and Malaysia, and a heading participation in a serve eight. It creates the Pru the largest unfamiliar insurer in China and India.
Tidjane Thiam, arch executive, hailed the understanding as a one-off, transformational opportunity. It will lead to a twin inventory for Pru shares in Hong Kong and London and emanate an general powerhouse that will beget some-more than half the sales and increase from the Asian economies, the fastest flourishing in the world.
Mr Thiam refused to order out relocating the Prus corporate domicile and senior manager group to Hong Kong. He pronounced that AIG had committed to sojourn an financier at slightest for the middle tenure and that it could secure a chair on the board.
Several of the Prus heading investors, together with the largest owner, Capital Group with only over 10 per cent, have concluded to behind the rights issue.
Pru shares fell some-more than twelve per cent to 529p, wiping roughly �2 billion off the insurers marketplace value, as investors eaten the huge money call.
Mr Thiam pronounced that the Pru had nonetheless to confirm who would run the lengthened Asian operations, now led by Barry Stowe, a former AIG executive. The insurer was additionally nonetheless to have a preference about that AIA management team it would rehire, raising a subject symbol over the destiny of Mark Wilson, arch executive.
David Wighton, page 39
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