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May 14, 2010updated 13 Apr 2017 8:53am

Prudential’s plan to buy AIA hits a brick wall

It is back to the drawing board for UK insurer Prudential and advisers on its planned £13.9bn ($20.7bn) rights issue following a move by UK regulator the Financial Service Board (FSA). The rights issue forms the key funding avenue for Prudentials $35.5bn acquisition of US insurer American Insurance Groups Asian life insurance unit AIA Group

By LII editorial

It is back to the drawing board for UK insurer Prudential and advisers on its planned £13.9bn ($20.7bn) rights issue following a move by UK regulator the Financial Service Board (FSA).

The FSA action on 5 May resulted in a last minute delay to the release of a 1,000 page prospectus detailing the issue.

The rights issue forms the key funding avenue for Prudential’s $35.5bn acquisition of US insurer American Insurance Group’s Asian life insurance unit AIA Group.

The delay was, according to UK media reports, precipitated by concerns expressed by the FSA as to the capital adequacy of Prudential following its merger with AIA Group.

Of the total cost of the acquisition of AIA Group, $25bn will be in cash, $8.5bn in Prudential ordinary shares and $2bn in Prudential preference shares. In addition to rights issue Prudential’s plan also calls for it to raise $5bn via a senior debt issue.

Prudential is being advised on the rights issue by Credit Suisse, JPMorgan, Cazenove and HSBC.

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