Prudential boss under pressure to step down

The chief executive of Prudential is under pressure to step down as investor fury at last week’s £1bn (€1.4bn) rights issue continues to mount, it was reported today.

Jonathan Bloomer shocked the London market on Tuesday by announcing the massive fundraising to finance growth in the Pru’s UK business.

Investors are understood to be unhappy that the move was not flagged in advance and are due to meet the company this week to air their concerns.

Prudential shares slumped 14% last week as investors reacted to the impact that the new stock will have on the existing investor base, wiping £1.6bn (€2.3bn) off the value of the company.

According to the Observer, investors are still angry at a 40% cut in its annual dividend last year despite a commitment to a progressive dividend policy.

Mr Bloomer also saw his standing weakened by a failed bid for American General in 2002, while a buyer could not be found for the Pru’s remaining 79% stake in its Egg internet banking business this year.

The proposed issue of 337.2 million new shares – at a 32.8% discount to Monday’s price at 308p a share – represents around 16.7% of the entire issued share capital of the company.

Dealings in the new stock are due to start on November 11 as no special shareholder meeting is needed to approve the issue.

Mr Bloomer said the rights issue was about raising capital to grow the UK business, which has bounced back in recent months to show a 19% improvement in sales to £521m (€750.8m) between January and September.

The fundraising exercise should ensure the Pru meets rules on capital requirements, which are more onerous than previously.