UPDATE: Prudential's Rights Terms May 5; Seeks Singapore Listing

U.K. insurer Prudential PLC (PRU.LN), which is mounting an effort to buy American International Group Inc's (AIG) Asian unit for $35.5 billion, said Friday it will release terms of a rights issue on May 5 and that it expects its shares to start trading in Hong Kong on May 11.

Prudential also said it has applied for a secondary listing in Singapore, aiming to start trading shares there also on May 11.

The move to list in those markets is meant, at least in the near term, to garner support from Asian investors for a $20 billion rights issue to help fund the acquisition of AIA Group Ltd.

Investors will have three weeks to digest the terms of the rights issue before they vote on it on May 27.

The announcement removes the uncertainty over key dates in the company's acquisition timetable and also confirms the recent speculation over a Singapore listing, which was not in the initial plans when Prudential first announced on March 1 its proposed takeover of AIA.

"A secondary listing in Singapore is complementary to the Hong Kong listing and provides further evidence of Prudential's commitment to the region," Prudential said.

The Hong Kong and Singapore listings will be done by way of introduction, which means adding trading venues without necessarily raising additional funds, as no new shares will be issued.

Apart from the Asian listings, Prudential will continue its primary listing on the London Stock Exchange and its American Depositary Shares will continue to be listed on the New York Stock Exchange.

At 0849 GMT, Prudential shares were up 0.7% at 550 pence while the FTSE100 index was up 1%.

Chief Executive Tidjane Thiam said: "I am pleased to confirm that, alongside the AIA transaction, plans for our dual primary listing in Hong Kong are on track.

"Historically, the U.K. has been, and will remain, the largest market for our investors and we are committed to our London listing.

"In addition to this presence, we are developing two more significant trading centres in Hong Kong and Singapore. In this context, I am delighted to be able to announce our planned secondary listing in Singapore. The two new listings will enable investors in Asia to participate in the outstanding growth potential that Prudential offers".

He added that Prudential "has a rich and extensive history in Asia, operating in Hong Kong for nearly 50 years and Singapore for over 75 years, and today's announcement reaffirms our long-term commitment to both these markets".

An approval from the Singapore Exchange is expected soon.

"We aim to offer them (Prudential) a liquid market with depth. We are proud that Prudential has chosen Singapore for their listing. It's a strong endorsement of SGX," SGX Chief Executive Magnus Bocker told Dow Jones Newswires.

Bocker didn't say how many shares will be listed in Singapore.

Prudential's first quarter trading statement will also be released on May 5. It will have its annual general meeting on May 19 but shareholders will reconvene on May 27 to vote on the acquisition and the rights issue.

Prudential needs a 75% approval rate based on votes cast, with each share representing one vote.

If approved, the rights would start trading on May 28 and the rights-issue shares would start trading on June 15.

Panmure Gordon analyst Barrie Cornes said the announcement "clears up the uncertainty over the timetable." Still, Cornes said he expects Prudential shares to have "a great deal of volatility" until the start of the dealings of the issued rights.

He said the recent short-selling on the Prudential stock by Lansdowne Partners and Mason Capital "reinforces our view that the shares will be volatile."

Cornes estimates that the stock's theoretical ex-rights price, or the projected price for a company's shares after issuing new rights-shares, will be 184 pence a share, with the rights priced at 110 pence a share and shareholders eligible for 4.9 new shares for each share they hold. Cornes has a hold rating on the stock.

Keefe, Bruyette & Woods analyst Greig Paterson said Prudential's decision to list in Singapore shows the company is tapping into its substantial client base in that country.

He noted that Singaporean investors took part in a previous GBP750 million hybrid capital raising by Prudential, which was oversubscribed.

Also, Singapore's GIC, the sovereign wealth fund, is a key investor in Prudential and is part of the underwriting syndicate for Prudential's upcoming rights issue.

Paterson said a Singapore listing will make it more convenient for these investors to buy Prudential shares.

- By Vladimir Guevarra, Dow Jones Newswires. Tel. [phone], [e-mail]

(Costas Paris in Singapore contributed to this article.)