Imagine a world without proxies – one in which every shareholder not only turns out to vote, but does so according to its stated investment priorities. Would Prudential get the 75 per cent approval it needs to proceed with its rights issue, and thus the acquisition of AIA?
Growth-focused funds – speaking for 37 per cent of the shares, on Thomson Reuters estimates – should be tempted, if only because New Pru would be the leading life insurer in seven of south-east Asia's fastest-growing economies. Value-focused funds (35 per cent), too, might buy the argument that the chance of a re-rating for New Pru is higher than that of Pru solo, or perhaps even that of a break-up scenario.
Where things would get tricky, though, is with the 10 per cent of shareholders pursuing a Garp strategy – or “growth at a reasonable price”. A $21bn rights issue would be the largest acquisition-related financing in history, surpassing the ominous benchmark of Fortis's $19.3bn issue to buy bits of ABN Amro in 2007. Goodwill amounts to almost 40 per cent of the $35.5bn consideration, which stretches the definition of “reasonable”, given the obvious enmity between the two sides. The insurance sector, moreover, has been marked down by 11 per cent since the deal was announced, but the price tag hasn't. Index funds (12 per cent) have a say in the vote, but if the deal goes ahead they have to stump up the cash anyway. Neither camp, meanwhile, should pin its hopes on hedge funds (1 per cent) or funds with no declared style (5 per cent), both archetypal swing voters.