Prudential cash call receives lukewarm reception
Prudential today announced plans for a £14.5 billion cash call after receiving the go ahead from the Financial Services Authority (FSA) in relation to its acquisition of AIG's Asian operation. This deal has been controversial to say the least and delayed on a number of occasions due to regulatory issues and investor concerns. However, it looks as though concerns regarding the Greek debt issue, problems in Europe and the new coalition government could well hinder the exercise.
While there was no doubt that long-term the acquisition of AIG's Asian operation is a positive move there is concern about the management experience currently on show at Prudential. There is also growing concern about investor appetite for fundraisings, not to mention fundraisings of this size, amid worries about the state of the worldwide economy and worldwide stock markets. So far the fundraising has received something of a lukewarm reception and much will depend upon the state of stock markets over the coming weeks.
Even though Prudential is looking to dramatically expand its overseas operations there has been speculation regarding a potential bid for the company itself. If any bidders are waiting on the sidelines there will need to show their hands fairly soon.
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