Embattled Prudential admits to mishandling £1bn rights issue

Prudential, the UK's second-largest insurer, admitted yesterday that it had handled the communication of its £1bn rights issue badly, but insisted that its chief executive, Jonathan Bloomer, would not be standing down in spite of growing pressure from shareholders for him to quit.

Prudential, the UK's second-largest insurer, admitted yesterday that it had handled the communication of its £1bn rights issue badly, but insisted that its chief executive, Jonathan Bloomer, would not be standing down in spite of growing pressure from shareholders for him to quit.

Geraldine Davies, the group's director of corporate relations, said that by the end of the summer, the company had believed its shareholders were aware that it may need to embark on a capital raising initiative to fund growth. However, she conceded that with hindsight, it had not made itself clear enough.

She said: "We got something wrong on communication. But we weren't deliberately misleading. We believe we flagged [the possibility of needing to raise capital] by saying that we thought there were some good opportunities in the UK, and that we would be looking to take advantage. All long-term business is capital intensive. But we didn't flag it clearly enough."

Shareholders were particularly angered by the surprise of the rights issue, arguing that Prudential had made it clear to them that it would not need to raise additional capital, even after failing to sell its 79 per cent in Egg, the internet bank.

Ms Davies added that the group would rather have carried out the rights issue in the new year, giving it more chance to prepare investors. However, it decided to push the button on the deal in October due to the timing of an analysts' trip to Asia, scheduled for next month.

She said the group wanted to be able to give its analysts a fair view of its capital position and strategy, rather than having to hold back from revealing details of a forthcoming rights issue.

Mr Bloomer has been under pressure from some shareholders over the past week to resign, and has consequently been on a charm offensive to persuade investors that he is the right person to take the company forward.

Ms Davies said that Mr Bloomer still had the support of the board. She added that many of the shareholders who have met Mr Bloomer over the past week were willing to give him the benefit of the doubt. However, one investor said attitudes towards Mr Bloomer had "hardened" over the past few days, with a group of rebel shareholders still pushing for his departure.