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Qatar, Singapore to underwrite $20bn Pru issue

Singapore, March 5, 2010

Qatar Holding and Singapore's biggest sovereign wealth fund GIC have committed to underwrite a significant portion of UK Prudential's $20 billion rights issue.

GIC is an existing shareholder, with a 0.5 percent 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 $5 billion 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 dealmaking 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 are acting as joint global co-ordinators and joint bookrunners, it said.   

Prudential said it has enlisted over 30 global and Asian banks as joint lead managers, co-lead managers and co-managers for the fund raising that will be used to finance its $35.5 billion 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 expected to visit Thailand on Friday. 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. -Reuters




Tags: Qatar | Singapore | GIC | Prudential | AIG |

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