It may seem fanciful that Tidjane Thiam and other directors at Prudential believed that a leak of their planned $35bn takeover of AIA three years ago might come from the FSA. But they did. Here’s paragraph 4.6 from the final notice censuring Mr Thiam and fining the Pru $30m…
4.6. The directors of Prudential, including Mr Thiam, met on 31 January 2010 to be briefed on the proposed transaction by Credit Suisse. There was a consensus between the directors of Prudential at this meeting that:
(1) a leak was the key risk to the transaction;
(2) the FSA was one of a number of parties which might be the cause of a leak; and
A theory was gaining ground on Wednesday that, having utterly failed in any way to deal with Britain’s cartwheeling banks ahead of the crisis, the FSA, Britain’s alleged financial regulator, has now set its sights on wrecking the healthy side of Britain’s financial sector.
The Prudential has been fined £30m, and its strikingly successful chief executive, Tidjane Thiam, has been censured, seemingly for worrying that someone at the FSA might possibly leak news of the Pru’s ultimately bungled takeover bid for AIA three years ago. Read more
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An investigation is under way into the handling of Prudential’s $35bn aborted bid for Asian life assurer AIA, according to people familiar with the matter. The London-based insurer was ordered by the UK financial watchdog to commission law firm Clifford Chance to conduct an inquiry because of concerns about the management of the AIA deal, the people added. The external “skilled persons report” is focusing in particular on the Pru’s investment bank advisers, Credit Suisse, JPMorgan and HSBC, and whether they discharged their duties properly, writes the FT.
Prupim, the property investment arm of UK insurer Prudential, has bought three supermarkets occupied by Sainsbury for £125m for a fund that hedges inflation risk, reports Reuters. The sale and leaseback deal, made for M&G’s Secured Property Income Fund, is for Sainsbury’s Superstores in Worcester, Truro and Huddersfield. The fund – which targets prime properties many of which are on sale-and-leaseback arrangements – was launched in August 2007 to meet a growing appetite for investments that mitigate inflation risk, its manager Prupim said.
Blackstone Group has emerged as the likely front-runner for Citigroup’s Egg Banking ahead of the bid deadline on Thursday, reports Dow Jones Newswires. While the report says it is unclear whether other potential bidders, such as Barclays and TPG, remain interested, Reuters adds that TPG is expected to submit a bid. Citi, which bought Egg for £546m ($867m) from UK insurer Prudential in 2007, is selling the online bank in a push to dispose of non-core assets – probably for as little as £300m, according to Reuters. Blackstone is working on a plan to buy Egg together with private equity-owned credit-card company SAV Credit, adds DJN.
Shares in American International Group’s former Asian unit have surged 17 per cent on their first day of trading in Hong Kong, Reuters reports. AIA now bears a market value above $35.5bn, the initial offer made for it earlier in the year by UK insurer Prudential, in a deal that eventually collapsed. The robust debut will come as a boost for AIG, which remains AIA’s biggest shareholder, as it seeks to repay the government following its bailout during the financial crisis, the FT says. The ease with which AIA has completed Hong Kong’s biggest share sale – surpassing the mega-listings of Agricultural Bank of China earlier this year and ICBC in 2006 – highlights the strength of investor demand for Asian equities, the paper adds.
Prudential Financial and MetLife , US insurers and archrivals, are extending their competition to Japan as AIG sells its Japan units, reports Bloomberg. Prudential is set to buy AIG’s Star Life and Edison Life Insurance units for $4.8bn. MetLife meanwhile expects to complete a $15.5bn deal for AIG’s American Life Insurance Co, or Alico, which has a big presence in Japan, on Nov 1. The WSJ notes that the deals would be welcome after setbacks including the recent rejection by Taiwan’s regulators of the $2.15bn sale of AIG’s Taiwanese life business to Hong Kong investors. Meanwhile, the FT reports that AIG’s board is set to finalise a plan that will increase the US Treasury’s stake in the insurer to about 90%.
AIA, the Asian arm of US insurer AIG, has set Oct 29 for its planned $15bn-plus listing on the Hong Kong Stock Exchange, reports the FT. AIA is expected to set a price range for its IPO early next week and hopes to strike agreements with cornerstone investors, who could take one-fifth of the shares sold, a few days after that, said people close to the matter. AIA’s move follows the collapse of its planned $35.5bn sale to UK insurer Prudential this summer. The WSJ notes that AIA’s planned debut highlights a boom in Hong Kong IPOs.
The finance chief of AIA who quit the pan-Asia life insurer when it was to be sold to the UK’s Prudential, plans to launch a Hong-Kong-based reinsurer that would seek to raise $500m-$1bn of capital, reports the FT. Steve Roder’s new company would be unusual in an industry dominated by a handful of large European groups, the Lloyd’s of London insurance market and Bermudian companies. Roder plans to take the same finance chief role in the as-yet-unnamed firm, while Franz Josef Hahn, who ran Swiss Re’s China business for a decade, is set to be chief executive.
A potential bid for UK life assurer Prudential from Chinese investors faces multiple obstacles, and would proceed only if an IPO from Asian rival AIA proves too expensive, say bankers and analysts, reports Reuters. Prudential shares jumped nearly 5% on Monday after the Sunday Times reported that big Chinese investors who backed Pru’s abortive bid for AIA earlier this year were in “early stages” of considering an offer for the insurer. The investors, who include Go Guangchang, chairman of China’s Fosun International, and Fred Hu, former chairman of Goldman Sachs in China, would keep only Prudential’s flagship Asian division, the paper said. FT Alphaville notes various reasons to be sceptical of a Pru break-up.
Prudential was trading top of the FTSE gainers board on Monday on news a group of Chinese investors were considering a break-up bid for the UK insurer. According to the Sunday Times, the billionaire entrepreneurs were among the Asian backers who wanted to throw their weight behind Prudential’s failed $35bn takeover bid for its Asian rival AIA earlier this year. But, according to FT Alphaville, there are a number of reasons to be sceptical about the idea of a Pru break-up — among them the cash-flow dynamics. Read more
A group of Chinese investors are considering a takeover offer for UK insurer Prudential, reports Reuters, citing The Sunday Times. The billionaire investors had backed Prudential’s failed $35bn bid for AIA, the Asian arm of US insurer AIG and later held talks on taking a strategic stake in AIA, the newspaper said without citing sources. They could still take a stake in AIA, which is planning to float in Hong Kong, and are also examining options including a move for Prudential’s Asian business. Guo Guangchang, chairman of Fosun Group, Fred Hu, former China chairman of Goldman Sachs and Shan Weijian, chairman and CEO of Pacific Alliance Group, were said to have been involved in the discussions, the report said.
AIG will apply to Hong Kong regulators to list its Asian life insurance unit on September 21 with the aim to raise $15bn, sources familiar with the matter have told Reuters. The insurer has already appointed no fewer than eleven investment banks to manage AIA’s float, indicating its concern to get it away amid market volatility, the Daily Telegraph recently reported. Talks with the UK insurer Prudential over a takeover of AIA collapsed earlier this year, forcing AIG back to its original plan of an Asian listing.
Taiwan’s regulators on Tuesday blocked AIG’s sale of Nan Shan Life, its Taiwan life assurance unit, to a Hong Kong-based consortium for $2.15bn after months of uncertainty, reports the FT. The move is a blow for the US insurer, which hoped to use the sale to help repay loans from its US government rescue in 2008. It follows the collapse in June of AIG’s deal to sell AIA, its main Asian unit, to UK insurer Prudential. Bloomberg says that AIG will consider scaling back Nan Shan’s operations after the rejection, while the NYT cites analysts saying Taipei’s decision was unsurprising and indicated no change in regulatory behaviour.
Aviva confirmed on Monday that it hadn’t given so much as the time of day to the recent £5bn offer from RSA for its general insurance business — for reasons that were probably strategically prudential. But, well, other arguments against the deal were probably plain Prudential, too. As Oriel Securities notes, far from sewing Aviva up, RSA’s offer has just renewed focus on the insurer’s understated value instead, says FT Alphaville. Read more
Paternoster, the UK specialist pensions business set up by former Prudential executive Mark Wood, has been put up for sale and hopes to receive initial expressions of interest by September, reports the FT. The majority of Paternoster’s original backers, who face the potential loss of more than half their £500m equity investment, want to exit the company after it was forced to close to new business at the height of the financial crisis.
Prudential tried to put its failed $30bn-plus takeover attempt of AIA behind it on Thursday with news of a big rise in half-year profits and confirmation that the forecast £450m bill for the ambitious bid had been cut by more than £70m, reports the FT . Chief executive Tidjane Thiam, whose job had seemed under threat after the failed AIA deal, said strong growth in sales and profits in both Asia and the US drove the UK life assurer’s results. The Pru’s operating profits were up 41% at £968m from £688m in 1H last year. The Telegraph meanwhile adds that Thiam admitted on Thursday that the Pru could actually become a target of its former target AIA, owned by US insurer AIG.
Breaking pre-market news on Thursday,
– Dana Petroleum talks with Korean suitors deadlocked — statement. Read more
Citigroup is set to put Egg, its UK online bank, up for sale – possibly via auction later this year – as part of the US group’s plan to shed more than $800bn in non-core assets, reports the FT. Egg, created by UK life assurer Prudential before being sold to Citi in 2007 for £575m, could draw interest from UK and international groups, including Spain’s Santander and Tesco’s Metro Bank, analysts said. The Telegraph notes that in its 2007 deal, the Pru retained the right to sell life and pensions products to Egg customers for at least five years.
Bob Benmosche, AIG’s CEO, has moved to stamp his authority on the insurer after winning a boardroom battle, replacing the head of the company’s giant Asian arm only months before its planned listing, the FT reports. The bailed-out US insurer is expected to announce on Monday that Mark Tucker, a former head of the UK’s Prudential, will take over from AIA CEO Mark Wilson. Sky News’ Mark Kleinman says this raises the prospect that Tucker could one day again find himself at the helm of the Pru’s operations, since AIA has been touted as a potential bidder for the Pru.
The board of AIG is due to meet in New York on Wednesday to discuss the future of its Asian life insurance business, AIA, after the disastrous collapse of plans to sell the business to Britain’s Prudential. An IPO now looks the most likely option, Reuters reports, citing unnamed sources.
Asian investors have shunned shares in Prudential after it listed in the region in May, providing further ammunition to critics who believe the UK group mishandled its attempt to buy AIG’s local life insurance unit, says the FT. Fewer than 40,000 of Prudential’s shares changed hands, on average, each day last week on the Hong Kong and Singapore stock exchanges, compared with a daily trading volume above 12m in London.
Calls for a shake-up of the Prudential’s board of directors could intensify this week as the life assurer meets some of its top shareholders in the wake of its failed bid for AIA, reports the FT. Fidelity International, the investment group, is to meet Harvey McGrath, the Pru chairman, on Monday ahead of a week of critical meetings between main board directors and shareholders. Investors have called for McGrath and Tidjane Thiam, the chief executive, to resign following the $35.5bn bid for AIA in Asia, which incurred costs of more than £400m.
Shareholder discontent over the Prudential’s aborted bid for AIA is increasingly focusing on Harvey McGrath, chairman, and a growing feeling he should quit the UK life assurer, reports the FT. Key shareholders who had been calling for the departure of Tidjane Thiam, chief executive, now say that the chairman should leave instead to make way for a stronger, independent candidate.
Does this sound familiar?
UK insurance company announces plan for transformational acquisition, funding by a large rights issue, deal maths only stack up if ambitious cost and revenue synergies are achieved. Read more
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. Read more
Top institutional shareholders in Prudential have called a meeting with the UK assurer to raise concerns over Tidjane Thiam’s role as chief executive after the collapse of its $35.5bn bid for the Asian assets of AIG, reports the FT. Members of the UK’s National Association of Pension Funds, which collectively own about 12% of the London stock market, will meet the Pru on June 22 to discuss whether a broad shake-up of the board is needed.
Harvey McGrath, chairman of Prudential, has not ruled out resurrecting its failed $35.5bn (£24.5bn) bid for AIA, as he defended the insurer’s strategy before shareholders at its annual meeting, reports the FT. Mr McGrath was asked several times whether the Pru would consider trying again to buy some or all of AIA. “We will of course watch what happens to AIA,” he said.