Britain's Prudential
said it would buy AIG's Asian life insurance arm for $35.5 billion, in a deal set to make the insurer the undisputed leader in one of the world's fastest-growing financial services markets.

The acquisition will be financed in part by a $20 billion equity capital raising, one of the biggest cash calls ever, and by a $5 billion debt issue, Prudential said on Monday, confirming an earlier Reuters report.

Investors and analysts said they needed to know more about the finances of the AIG's Asian unit, AIA, before they could judge whether the deal could justify a capital-raising on that scale.

At $20 billion, the rights issue would rank as one of the largest cash calls in the world to date, nearly equaling Pru's current market value of $23 billion.

Fifteen billion pounds is a huge amount and I would want to see more details of the kind of return profile and the timetable for that, said one top ten Pru shareholder, speaking before Prudential confirmed the deal.

Prudential's shares tumbled 11.5 percent to 532 pence after trading resumed after an earlier suspension on Monday.

DOWNGRADES

Analysts at brokerages Oriel Securities and Panmure Gordon downgraded Prudential shares on Monday.

It's going to be enormously dilutive, said ING analyst Kevin Ryan.

No one knows exactly what AIA contains or how profitable it is, or how it overlaps with Pru's existing businesses.

A takeover of 90-year old AIA would make Prudential Asia's biggest foreign insurer, boosting the company's appeal to investors seeking exposure to soaring demand for personal financial services across the region, fueled by strong economic growth.

Prudential is already among the top foreign insurers in Asia, generating nearly half its 2008 profit there, and has stated its ambition to broaden its footprint across the region.

The acquisition, which comes after an initial approach for AIA by Prudential fell through last year, marks the company's first major transaction under charismatic new chief executive Tidjane Thiam, who took over the top job in October.

Earlier, British insurance-focused takeover vehicle Resolution said it was not in talks to buy Prudential's UK arm. A weekend press report had said Pru might offload the unit to Resolution in the event of the AIA acquisition going ahead.

(Additional reporting by Raji Menon)