British insurance giant Prudential is to raise £14.5 billion (€17 billion) from the sale of new shares to help fund a record takeover of Asian insurer AIA.
The British group had delayed by almost two weeks details of the record rights issue needed to fund the insurance sector's biggest takeover, as regulators voiced concerns about the enlarged company's capital strength.
Prudential announced in March that it had agreed to buy AIA - the Asian arm of troubled US insurer AIG - for $35.5 billion (€29 billion).
It expects to complete the takeover in the third quarter of 2010 while reports suggest Prudential may have to sell its British operations to fund the rest of the deal.
'We are creating the leading life insurer in the fastest growing region in the world, giving us greater exposure to the highly attractive long-term growth offered in Asia,' Prudential chairman Harvey McGrath said.
The takeover will give Prudential about 30 million customers in Asia and see the Asian operation become by far the group's biggest division - contributing some 60% of new business profit.
Regarding the rights issue, Prudential said it was offering almost 14 billion new shares, each priced at 104p. According to analytical group Dealogic, the rights issue is the biggest ever launched to fund a takeover.
Current Prudential investors will be offered 11 new shares for every two shares they own. The sale price represents an 80.8% discount to the insurer's closing price of 542.5p on Friday. The AIA deal and the rights issue need 75% backing at a shareholders' meeting due on June 7.
