UPDATE: Prudential's Rights Terms May 5; Seeks Singapore Listing
April 23 2010 - 5:27AM
Dow Jones News
U.K. insurer Prudential PLC (PRU.LN), which is mounting an
effort to buy American International Group Inc's (AIG) Asian unit
for $35.5 billion, said Friday it will release terms of a rights
issue on May 5 and that it expects its shares to start trading in
Hong Kong on May 11.
Prudential also said it has applied for a secondary listing in
Singapore, aiming to start trading shares there also on May 11.
The move to list in those markets is meant, at least in the near
term, to garner support from Asian investors for a $20 billion
rights issue to help fund the acquisition of AIA Group Ltd.
Investors will have three weeks to digest the terms of the
rights issue before they vote on it on May 27.
The announcement removes the uncertainty over key dates in the
company's acquisition timetable and also confirms the recent
speculation over a Singapore listing, which was not in the initial
plans when Prudential first announced on March 1 its proposed
takeover of AIA.
"A secondary listing in Singapore is complementary to the Hong
Kong listing and provides further evidence of Prudential's
commitment to the region," Prudential said.
The Hong Kong and Singapore listings will be done by way of
introduction, which means adding trading venues without necessarily
raising additional funds, as no new shares will be issued.
Apart from the Asian listings, Prudential will continue its
primary listing on the London Stock Exchange and its American
Depositary Shares will continue to be listed on the New York Stock
Exchange.
At 0849 GMT, Prudential shares were up 0.7% at 550 pence while
the FTSE100 index was up 1%.
Chief Executive Tidjane Thiam said: "I am pleased to confirm
that, alongside the AIA transaction, plans for our dual primary
listing in Hong Kong are on track.
"Historically, the U.K. has been, and will remain, the largest
market for our investors and we are committed to our London
listing.
"In addition to this presence, we are developing two more
significant trading centres in Hong Kong and Singapore. In this
context, I am delighted to be able to announce our planned
secondary listing in Singapore. The two new listings will enable
investors in Asia to participate in the outstanding growth
potential that Prudential offers".
He added that Prudential "has a rich and extensive history in
Asia, operating in Hong Kong for nearly 50 years and Singapore for
over 75 years, and today's announcement reaffirms our long-term
commitment to both these markets".
An approval from the Singapore Exchange is expected soon.
"We aim to offer them (Prudential) a liquid market with depth.
We are proud that Prudential has chosen Singapore for their
listing. It's a strong endorsement of SGX," SGX Chief Executive
Magnus Bocker told Dow Jones Newswires.
Bocker didn't say how many shares will be listed in
Singapore.
Prudential's first quarter trading statement will also be
released on May 5. It will have its annual general meeting on May
19 but shareholders will reconvene on May 27 to vote on the
acquisition and the rights issue.
Prudential needs a 75% approval rate based on votes cast, with
each share representing one vote.
If approved, the rights would start trading on May 28 and the
rights-issue shares would start trading on June 15.
Panmure Gordon analyst Barrie Cornes said the announcement
"clears up the uncertainty over the timetable." Still, Cornes said
he expects Prudential shares to have "a great deal of volatility"
until the start of the dealings of the issued rights.
He said the recent short-selling on the Prudential stock by
Lansdowne Partners and Mason Capital "reinforces our view that the
shares will be volatile."
Cornes estimates that the stock's theoretical ex-rights price,
or the projected price for a company's shares after issuing new
rights-shares, will be 184 pence a share, with the rights priced at
110 pence a share and shareholders eligible for 4.9 new shares for
each share they hold. Cornes has a hold rating on the stock.
Keefe, Bruyette & Woods analyst Greig Paterson said
Prudential's decision to list in Singapore shows the company is
tapping into its substantial client base in that country.
He noted that Singaporean investors took part in a previous
GBP750 million hybrid capital raising by Prudential, which was
oversubscribed.
Also, Singapore's GIC, the sovereign wealth fund, is a key
investor in Prudential and is part of the underwriting syndicate
for Prudential's upcoming rights issue.
Paterson said a Singapore listing will make it more convenient
for these investors to buy Prudential shares.
- By Vladimir Guevarra, Dow Jones Newswires. Tel. +44 (0)
2078429486, vladimir.guevarra@dowjones.com
(Costas Paris in Singapore contributed to this article.)
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