Investors welcome Prudential rights issue
British insurer Prudential today said investors had reacted positively to its controversial £1bn (€1.4bn) rights issue.
The group said it had received acceptances relating to 310,221,770 new shares, representing 92% of the total number of shares offered.
The issue, which closed yesterday morning, brought a sharp reaction from some of the group’s institutional investors when it was originally announced.
Fund managers from heavyweight shareholders including Fidelity, Schroders and Legal & General reportedly accused the Pru of springing the announcement on them without warning.
They claimed it represented the latest in a series of errors made by the firm since chief executive Jonathan Bloomer took charge, including a 40% cut in the annual dividend last year, an unsuccessful bid for American General in 2002 and its failure to find a buyer for the Pru’s remaining 79% stake in its Egg internet banking business this year.
The shareholders were trying to garner support among board members and other institutional investors for a move to oust Mr Bloomer, reports late last month claimed.
The Pru plans to use most of the proceeds of the issue to boost its UK business, which has bounced back in recent months to show a 19% improvement in sales to £521m (€744m) between January and September.
One analyst, speaking today on condition of anonymity, said people in the City had been “a bit surprised” about the issue because they had originally believed the UK was not an area in which the Pru was expecting growth.
However, recent house price falls meant people may put more money into savings instead of property, indicating a potential upturn in the Pru’s UK market, he said.
“If you think that a week ago they were talking about Bloomer going and now there’s been a reasonable take-up of this rights issue, perhaps people now believe what the company’s saying about the UK,” he said.
A Prudential spokeswoman said: “The take-up is in line with what you would expect.”
Prudential shares, which fell to about 400p after the announcement of the rights issue as investors digested the impact that it could have on the company’s existing investor base, lifted 4p higher to 422.5p.
