Sunday, 7 March 2010

USA's AIG's AIA, part II

telegraph: Pru braced for share-price volatility

Mr McGrath [Prudential's chairman] said that the huge growth potential in the Asian insurance market meant that Prudential had offered the right amount for such a valuable asset

"The market has a lot of cash that needs to be put to work," he said. "This is not a bail out. We're not raising capital because we have a problem. What we are doing is affording investors an opportunity to participate in a growth story over the medium term.

"Yes, it is bold and it is large but it has been very carefully considered. We know this business very well in Asia."

Pru's shareholders obviously are not happy with the planned acquisition of the "valuable asset" AIA; the worries might not be answered with above lines but they might be related to the question why troubled AIG is cashing in a mere $35bn for something that has a "huge growth potential" in the first place.

Carpe diem!


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