As the pressure mounts on Prudential CEO Tidjane Thiam, rivals and interested parties are piling in with their tuppence worth.
As Sky News commentator (and FT columnist-to-be) Mark Kleinman, wrote on his blog on Tuesday, at least three of the Pru’s biggest shareholders will hold showdown talks next week with the life assurer’s directors to demand boardroom changes.
According to Kleinman, Fidelity, Legal & General Investment Management and Schroders have arranged meetings with either Harvey McGrath, the Pru’s chairman, or James Ross, the senior independent director, to express anger at the handling of the Pru’s failed $35.5bn bid for AIA, the Asian business of US insurer AIG.
Added Kleinman:
I understand that these three institutions – which are among the most blue-chip names in the fund management industry – will say that they want an immediate recruitment process launched to find a replacement for Tidjane Thiam, the Pru’s chief executive.
Richard Buxton, Schroders’ head of UK equities, has already made public his concerns about the Pru’s board, although both Fidelity and L&G both declined to confirm their views today. What is clear, given that both Fidelity and L&G are top 10 shareholders in the Pru (Schroders’ shareholding is smaller), is that the investors who want to see imminent changes to the company’s leadership are not “outliers”, as McGrath was accused of characterising them a few days ago.
It seems logical to suppose that the change-seeking shareholders who see McGrath will want Thiam ousted immediately while those who meet with Ross may well be soliciting McGrath’s resignation as well.
The FT, confirming the report on Wednesday, said that members of the UK’s National Association of Pension Funds, which collectively own about 12 per cent of the London stock market, will meet the Pru on June 22 to discuss whether a broad shake-up of the board is needed.
A couple of Pru shareholders had contacted Mark Tucker, former Pru CEO, about whether he would return, “although he would be unlikely to go back to the chief executive role”, said the FT. Others however have pointed to Michael McLintock, chief executive of M&G, the Pru’s asset management arm, as a potential interim chief executive, the report added.
As one top 15 shareholder told the FT:
“It would be curious for Mark Tucker to return, having left….But if it was done in association with Michael McLintock and in the full understanding that they would be on, say, a year’s contract to conduct a strategic review, we’d support the idea”.
Amid the kerfuffle, it seems appropriate, then, for former AIG chief executive Hank Greenberg to pipe up at a conference in Madrid on Tuesday to describe Thiam’s AIA takeover play as a “bridge too far”.
As Bloomberg reports, Greenberg said:
“The size of Prudential was just so small that the amount of money that they had to borrow was greater than their market cap.. the Prudential attempt to take over AIA was a bridge too far.”
Anyway, added Greenberg (with dull predicatbility) it was mistake for AIG to sell AIA, a company with a “unique franchise” that has 100 per cent ownership of its business in China.
Adding to the list of unhelpful advice or comments, Donald Guloien, chief executive of Manulife, said on Tuesday that the Canadian insurer stood to benefit from “confusion” in Asia surrounding the status of AIA.
“The more there’s confusion about what’s going on, it provides opportunities for people to deal with what’s a very stable situation here at Manulife,” Guloien told Bloomberg.
Well, at least someone’s happy about the Pru’s AIA debacle…
Related links:
Markets live transcript, 7 June 2010 – FT Alphaville