Delayed takeover prospectus to promise higher returns and confirm plans for disposals
Prudential will this week raise its growth forecasts and hint at a slew of future disposals as it battles to persuade investors to back its planned $35.5 billion (£24.4 billion) takeover of its Asian rival AIA.
Britain’s biggest insurer will publish a 1,000-page prospectus in the next few days to back up the £14 billion share issue this is required to fund the deal.
The document is already two weeks late after an unexpected intervention by the Financial Services Authority, which forced the Pru to restructure the deal following concerns over its capital structure. The regulatory issues added to concerns of a number of investors, which are threatening to block the transaction over claims that it is too risky and too expensive.
Tidjane Thiam, the Prudential chief executive, will launch a charm offensive with investors as soon as the prospectus is published.
The document is expected to reveal that the underlying value of AIA has soared since the takeover was announced two months ago.
The predicted revenue synergies from the deal will be increased by about 15%, according to analyst estimates.
Plans to dispose of the group’s British and American businesses are expected to be hinted at in the document. Although neither operation will be sold before the deal completes, both are expected to be auctioned off soon afterwards.
The prospectus is also expected to reveal that AIA’s Indian business will be sold to its joint venture partner Tata, the giant conglomerate whose interests range from vehicles and steel to tea.
AIA’s Chinese business, the country’s only insurance operation wholly owned by a foreign investor, will also be put on the block.
A number of large Asian investors are believed to be waiting in the wings to bankroll Prudential if its existing shareholders get cold feet on the deal.
Thiam is believed to have been offered personal assurances from the Singapore government that the state investment funds GIC and Temasek are willing to provide billions of pounds.