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Will Prudential be beaten by the markets?

It seems as though Prudential has finally received official clearance from the FSA (Financial Services Authority) with regards to a fundraising and the acquisition of AIG's Asian unit. However, there are growing concerns that volatility in the worldwide stock market could play a part in the forthcoming fund-raising which will raise in the region of $21 billion.

The company had planned to raise the funds last week but due to a delay in talks with the FSA the fundraising was postponed. When you consider that this is one of the largest fundraisings ever seen in the insurance sector there will need to be a watertight story to convince investors to invest in these difficult markets. A look back at the Lloyds bank £13.5 billion cash call last year may well give a pointer towards the potential for success although unfortunately Prudential does not have government backing as Lloyds bank had.

At this point in time it is difficult to say with certainty whether Prudential will be able to push through the fundraising and finally rubberstamp the acquisition although there is no doubt the company is going all out to try and close the deal. We await developments with anticipation.

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