Singapore GIC, Qatar to Underwrite Part of Prudential’s Rights Offer

By | March 5, 2010

Singapore’s biggest sovereign wealth fund GIC and Qatar Holding LLC 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, signaling 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 deal making after they turned cautious last year when they were burnt by early investments in Western banks such as Citigroup.

“The joint global co-coordinators 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 J.P. Morgan Cazenove are acting as joint global co-coordinators 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 U.S. group repay a big chunk of its taxpayer debt.

The banks that joined the syndicate are Banca IMI, Banco Santander, BofA Merrill Lynch, Citigroup, Deutsche Bank, ING Bank N.V., Morgan Stanley, RBS Hoare Govett and UBS Investment Bank as joint lead managers.

Barclays Capital, BNP Paribas, Credit Agricole CIB, Mediobanca, Natixis, Nomura International, Scotia Capital, Societe Generale, Standard Chartered, UniCredit Bank AG and United Overseas Bank are co-Lead managers.

BBVA, BOC International, Commerzbank, DBS Bank, Fortis Bank Nederland, ICBC International Securities, Keefe, Bruyette & Woods, Lloyds TSB Corporate Markets, Macquarie Capital and RBC Capital Markets as co-managers.

(Reporting by Saeed Azhar; Editing by Valerie Lee)

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