M&A bankers are a uniquely optimistic breed. At the start of March, when UK insurer Prudential announced its agreement to take over the Asian operations of AIG in a deal that will double its size and require the largest ever UK rights issue to finance it, they were delighted. Other insurers will have to respond, they argued. Those global insurers now lacking scale in non-Japan Asia, which everyone agrees will drive global GDP growth for the next 20 years and where insurance penetration is much lower than in developed markets, might have to launch their own deals.
But all this is simply to ignore something very startling and worrying. No matter how strong the industrial logic of the deal, in the first hours and days after the news broke the Prudential share price fell by within a fraction of 20%. By the end of March, after a month of explaining the transaction in more detail to investors, it was still close to 12% down from where it had stood at the end of February.
It looks as if the company has taken careful aim and discharged both barrels into its own feet.
Chief executive Tidjane Thiam has more than just Prudential shareholders to win over.