As reported, the company is embarking on the rights issue in order to buy AIA, the Asian arm of US-based AIG Group, in order to expand in what it regards as a key growth area for the insurance industry.
In a statement today, Pru chief executive Tidjane Thiam told investors that “through capital management and portfolio rationalisation, there will be opportunities for the combined entity to create additional shareholder value over and beyond the revenue and cost synergies identified".
Under the terms of the deal, the company will sell existing shareholders 11 new shares for every two they already own at 104p (HK$11.78) each.
The price is 81% below the stock’s closing price on 14 May.
The discount theoretically gives existing shareholders the option of selling their rights at a profit to other investors. However, the share price fell by as much as 5% on the news of the rights issue launch by early afternoon.
Prudential had been forced to postpone the offering 10 days ago after the Financial Services Authority expressed concern that the proposed takeover of AIA would leave the company under-capitalised.
Shareholders will be given a chance to vote on the rights issue on 7 June.
