Asian sovereign funds line up to back Prudential's AIA deal

Sovereign wealth funds from China and Singapore have been lined up to help fund Prudential's $35.50-billion purchase of AIA

Sovereign wealth funds from China and Singapore have shown interest in financing British insurer Prudential's $35.50-billion purchase of US insurance firm American International Group (AIG)'s Asian arm AIA, reports PTI.

"Sovereign wealth funds from China and Singapore have been lined up to help fund Prudential's $35.50-billion purchase of AIA," the Financial Times reported.

Attributing the developments to people close to the situation, the report said that Prudential and its advisers were in talks with sovereign funds from China and Singapore over the provision of billions of dollars to support a planned $20-billion share offer for AIA.

Prudential is considering a rights issue of $20 billion, giving existing shareholders the right to buy. However, if Prudential’s shareholders refuse to take up the offer, the sovereign wealth funds would invest in the shares offered, it added.

Further, the report noted that the initial response from Chinese and Singaporean sovereign wealth funds had been positive, although they had not made a final decision.

Earlier on Monday, Prudential said that it would pay $35.5 billion for the AIA buyout. Under the acquisition, the UK company would pay AIG $25 billion in cash, $5.5 billion in stock, $3 billion in mandatory convertible notes and $2 billion in preferred stock.
 

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