Prudential gives details of £14.5bn rights issue

Insurance giant Prudential has announced plans to raise £14.5bn ($21bn) from shareholders in the UK's biggest rights issue to date.

The extra cash will be used to fund Prudential's planned acquisition of AIA Group - AIG's Asian business.

Prudential's chairman Harvey McGrath called the proposed deal "a unique opportunity".

Details of the rights issue were due two weeks ago, but were delayed after concerns from regulators.

The Financial Services Authority (FSA) complained that the AIA deal could leave the new merged company with insufficient capital, but those worries now appear to have been resolved.

Asia growth

If agreed by shareholders, the acquisition of AIA will see the size of Pru's business more than double in size, with its Asian operations accounting for more than half of its profits.

It will also make the Pru the largest insurer in Asia, and the biggest life assurer outside of China.

The Pru currently has about seven million customers in the UK, while AIA has about 30 million customers in Asia.

There is also widespread speculation that the Pru will eventually pull out of the UK and the US completely, making it an Asian-focused business with its headquarters in London.

Prudential's chief executive Tidjane Thiam has set ambitious growth targets for the proposed merged company, with a pre-tax operating profit of at least £3.26bn planned by 2013.

"The combined business will be a fast growing and highly profitable company, with a leading position in many of the most attractive markets in the world," he said.