FACTBOX-Wary Pru investors digest $21 bln rights issue

LONDON, May 17 (BestGrowthStock) – Britain’s Prudential (PRU.L: )
unveiled a $21 billion rights issue on Monday, offering new
shares as it seeks to finance a planned acquisition of AIG’s
(AIG.N: ) Asian insurance business. [ID:nTOE64G02C]

Following are reactions relating to levels of shareholder
support for the offer:

DAVID CUMMING, HEAD OF UK EQUITIES, STANDARD LIFE

“I think they will have quite a lot of trouble raising that
cash, to be honest. I think they do supposedly have backers in
Asia, particularly the government of Singapore, but I think it’s
still going to be a very difficult deal to execute.

“I mean we and other shareholders believe the price is too
high and the financial case for the deal hasn’t been
particularly well articulated, so I think they are going to have
a difficult task getting this deal through.

“When you’re raising 14billion pounds, one needs a lot of
strategic and financial precision and we didn’t get that first
time round and we are sceptical.”

“We’re sceptical on price. They got into a mess in terms of
capital, and we’re not clear in terms of the strategy in terms
of the UK business and indeed some of the Asian businesses
they’re buying, so we need a lot more new information and we are
sceptical.”

(Cumming was speaking on BBC radio. Standard Life is the
17th largest investor in Prudential with a 0.78 pct stake)

AN UNNAMED TOP 20 INVESTOR

“They have priced pretty much as people expected but at
least it’s in play now. Roll on June 7th for the vote really.

“The vote is a really, really difficult one to call. They
had to offer a bit more in terms of underwriting fees. It’s a
big issue and we are at a very volatile point in markets as
well.

“It’s always been a bit of risk that because they’ve bid an
absolute amount against a fluctuating share price. You’ve got a
problem of taking on market risk and you’ve got market risk at
this point because of the volatility in the markets.

“I think if Capital (Capital Management) were actively
against it, I don’t think Pru would have risked it because you
can’t have such a big holder against the deal when you need 75
percent approval.”

PAUL MUMFORD, ASSET MANAGER, CAVENDISH ASSET MANAGEMENT

“The size of the right issue is largely as expected but it
is a huge amount of money to actually get hold off.

“From the first quarter figures, it looks as though the
company is trading pretty well in its own right without the
acquisition. Personally, I’m feeling a bit dubious as to whether
it is the best thing for shareholders.

“They have got some punchy targets looking forward in terms
of profitability of the group, but it does rely on the Far
Eastern markets. They have got more eggs in one basket than
before the issue.

“The initial reaction of the market was to mark the price
down. It’s recovered a bit, but that’s still down which is
understandable.”

(Cavendish has a 2.5 million pound holding in Prudential)

A SECOND UNNAMED TOP 20 INVESTOR

“Today’s announcement is not a game changer. I expect
Prudential management are relieved that they have finally come
out with it, but it doesn’t really change anything materially.
If you were against the deal before, you will still be against
it.

“On the cost side, they look to be slightly better but again
it’s not material to really change our view. It will depend to a
large degree on how management present when they have their
final meetings with investors in the next few days but I don’t
see them really departing from the script. It will be a pretty
close run thing.”

TIDJANE THIAM, CHIEF EXECUTIVE, PRUDENTIAL

“We were talking about financial returns and profits, but in
the absence of detailed financial information it was impossible
for them to make a (decision), quite simply.

“We have been very keen to get to this point today where we
can finally tell the full story. If you want an analogy, we were
a little bit like a fighter fighting with one arm behind his
back. We were handicapped, we weren’t able to answer a lot of
questions, which was frustrating for our shareholders.

“They have been quite supportive in this period… and have
given us the benefit of the doubt and the chance to come out
today and tell our story. We are confident, the quality of this
story is phenomenal.”

DAVID BUIK, BGC PARTNERS

“All I can say is that Mr Thiam must have tapped his major
institutional shareholders about the need for this money and
must he have satisfied them.

“This would be an amazing achievement in the light of the
current market, as sentiment is fairly negative.”

Investment

(Compiled by Paul Hoskins; reporting by Raji Menon, Clara
Ferreira-Marques and Myles Neligan)

FACTBOX-Wary Pru investors digest $21 bln rights issue