Business

Saturday March 6, 2010

GIC, Qatar to underwrite Prudential rights issue


SINGAPORE: Singapore’s biggest sovereign wealth fund GIC and Qatar Holding LLC have committed to underwrite a significant portion of UK Prudential’s US$20bil rights issue.

GIC is an existing shareholder, with a 0.5% stake in Prudential, but Qatar does not appear to rank as an existing investor, signalling that the British insurer is inviting new investors to make the deal a success.

GIC’s potential investment comes amid news that it may be sitting on a paper loss of about US$5bil on its investment in UBS following the conversion of its mandatory notes into shares.

It also shows how sovereign wealth funds are getting more active in global deal-making after they turned cautious last year when they were burnt by early investments in Western banks such as Citigroup.

“The joint global co-ordinators have confirmed that syndication since the announcement has been very well received, with demand for primary underwriting well in excess of the size of the rights issue,’ Prudential said in a regulatory filing in London.

Credit Suisse, HSBC and JP Morgan Cazenove were acting as joint global co-ordinators and joint bookrunners, it said.

Prudential said it had enlisted over 30 global and Asian banks as joint lead managers, co-lead managers and co-managers for the fund raising that would be used to finance its US$35.5bil acquisition of AIG’s Asian unit.

In what is the insurance industry’s biggest acquisition, Prudential is buying American International Assurance in a big bet on soaring demand in Asia for personal financial services.

AIA is regarded as AIG’s crown jewel because of its size, cash generation and presence in fast-growth Asia.

The latest announcement came when chief executives of Prudential CEO Tidjane Thiam and his AIG counterpart Robert Benmosche are leading a series of ‘town hall’ meetings across Asia that aim to allay concerns among staff of both companies.

The CEOs are reiterating they plan to keep the businesses and brands separate, with overlap mainly in back- and middle-office operations, according to people who attended the meetings.

The chief executives met employees in Malaysia and Singapore on Thursday and are scheduled to visit Thailand yesterday.

AIA serves more than 20 million customers in Asia.

Prudential has more than 11 million life insurance customers in the region.

The deal, which AIG chose over a planned AIA initial public offering in Hong Kong, would help the bailed-out US group repay a big chunk of its taxpayer debt.

The banks that joined the syndicate are Banca IMI, Banco Santander, BOA Merrill Lynch, Citigroup, Deutsche Bank, ING Bank NV, Morgan Stanley, RBS Hoare Govett and UBS Investment Bank as joint lead managers.

Barclays Capital, BNP Paribas, Credit Agricole CIB, Mediobanca, Natixis, Nomura International, Scotia Capital, Societe Generale, Standard Chartered, UniCredit Bank AG and United Overseas Bank are co-Lead managers.

BBVA, BOC International, Commerzbank, DBS Bank, Fortis Bank Nederland, ICBC International Securities, Keefe, Bruyette & Woods, Lloyds TSB Corporate Markets, Macquarie Capital and RBC Capital Markets as co-managers. — Reuters

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