Posted on May 26, 2010 by Sergio Ulloa
The response by investors to the first trading day of Prudential shares in Hong Kong and Singapore has been tepid, in part due to the current slump in the markets in Asia, the which augurs a possible undesired response to the big rights issue planned by Prudential with which to finance the US$35.5 billion (EUR 28.9 billion) takeover of AIA
This teaser listing, intended as a first step before the approximately US$21 billion (EUR 17.1 billion) rights issue, was made to test the market waters and appetite of investors in Asia for what promises to become a combined company to lead the life insurance business in the region.
Having overcome challenges thrown by the Financial Services Authority in the UK
and an impending challenge by Prudential shareholders
during the upcoming Extraordinary General Meeting on 07 June 2010, it would appear that the anticipated sunny market forecast is showing signs of some black clouds formation, given the global sentiment in regards to the health of the European Union bourses and the overall state of the global economy.
Based on other recent media reports, the head of AIA, Mark Wilson has indicated his intention to step down should the Prudential acquisition succeeds.
As it stands now, the initial public offerings (IPO) climate present in major markets around the world paints a scenario where other large companies have either postponed their IPO plans or underperformed upon their launch.
Going forward, Prudential may need to work on overdrive to wet the appetites of investors in order to achieve drumming up demand of their shares.
Insurance Company mentioned:
Prudential has been in the insurance and financial services business since 1848. Today they operate throughout the UK, US and Asia offering international health insurance and retirement planning services, supported by 27,000 employees worldwide.
AIA is a Hong Kong-based life insurance company doing business across Asia that has been in business since 1919. They service over 20 million policies through 23,000 employees and 300,000 agents throughout markets in Asia, including; Vietnam, Thailand, Taiwan, South Korea, Singapore, Philippines, New Zealand, Malaysia, Macau, Indonesia, India, Hong Kong, Mainland China, Brunei and Australia.