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Daily Insurance Industry News
Saturday 20th of January 2018
May 18, 2010

Mumford urges caution over Pru rights issue

by Richard Kilner

Story link: Mumford urges caution over Pru rights issue

Mumford urges caution over Pru rights issue

In response to Prudential’s record-breaking rights issue of £14.5bn, stock market veteran Paul Mumford, Senior Fund Manager at Cavendish Asset Management, has warned shareholders to be wary.

Mumford states that new shares will be discounted by 80%, from Friday’s closing price of 542.5p to 104p, and permit Prudential to proceed with its $35.5bn acquisition of AIA.

Mumford went on to state that the scale of the deal is not a surprise, but what is open to question is whether or not the deal is good for shareholders.

He went on to describe the move as a leap in the dark for Prudential, given that its current business is doing well and taking over such a large rival could prove troublesome.

Mumford expressed his confidence in the management of Prudential, adding that if anyone could make such a huge deal work they could.

He concluded that the firm would persuade shareholders, but stated that it would remain risky and unpopular in the City.

Earlier this month the FSA called a temporary halt to proceedings amid doubts of Prudential’s capital strength, with the pause only lasting a few days until the matter was resolved.

 

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