Britain's Prudential launched its $21 billion rights issue on Monday, finally allowing the insurer to push ahead with its acquisition of AIG's Asian insurance business.

The UK's largest insurer was forced to revise its $35.5 billion offer in an embarrassing and unprecedented last-minute delay by the regulator, the Financial Services Authority, nearly two weeks ago, to boost capital and earn approval for the deal.

Chief Executive Tidjane Thiam now hopes to woo wary investors and salvage credibility. Prudential will sell new shares at 104 pence, a 39 percent discount to the theoretical ex-rights price (TERP).

Thiam said in a television interview that shareholders had given the deal the benefit of the doubt.

We've seen already two completely new shareholders come into our top-20, at a very significant level. There was money set aside for the AIA IPO, don't forget that money is looking for a home, he said on CNBC television.

Prudential, which has been facing the makings of a shareholder revolt this month, saw investors turn increasingly mutinous after the surprise delay.

I don't think it's going to be easy for them to get the backing of enough shareholders. They will struggle to get the vote through, said one top-20 investor, asking not to be named.

Prudential shares were 5 percent weaker at 515 pence in opening trade, underperforming a 0.4 percent drop in the overall market <.FTSE>. Market bets that the company could pull the rights issue had supported the shares in recent weeks.

AIG -- nearly 80 percent owned by the U.S. government -- had originally scheduled to float AIA on Asian stock markets in an Initial Public Offering (IPO), but Prudential's bold acquisition halted that.

Prudential -- which will become the largest foreign insurer in Asia if its audacious purchase of American International Assurance (AIA) goes through -- said it would offer its owners 11 new shares for every two shares held.

The group separately also reported a 26 percent rise in first-quarter sales.

The company also gave targets of annualized revenue synergies of $800 million pre-tax and pre-tax cost synergies of $370 million during 2013, and remittances of at least $1 billion per year from the AIA group in 2011 and onwards.

The group needs 75 percent of shareholders to approve the deal, key to helping AIA's bailed-out U.S. parent AIG repay its taxpayer debt. A vote had been due on May 27, but that is now likely to be delayed.

Prudential slightly altered the terms of the deal after the FSA expressed concerns about the insurer's capital base. It said its debt financing arrangements were revised to include a facility of $5.4 billion of hybrid capital.

It had also secured a standby commitment from AIG to subscribe for up to $1.875 billion of hybrid capital.

(Writing by Douwe Miedema; Editing by Erica Billingham)