Shareholder advisory service warns investors off Pru's AIA deal

What is the safe choice for fund managers when they decide whether to support Prudential's $35.5bn bid for AIA and accompanying rights issue? It is a relevant question because safety appeals to investment managers. Few well paid careers were ruined by voting in favour of Royal Bank of Scotland's tilt at ABN Amro because (virtually) everybody made the same mistake. There were few dissenting voices and there was safety in numbers. The Pru-AIA situation is starting to look different. RiskMetrics, a voting adviser, is telling clients to shun the deal. The significance of its stance is that, if the AIA takeover proceeds and proves to be a flop, shareholders who backed the deal would no longer be able to trot out the usual line that "nobody could have foreseen the dangers". Questions would be asked and voting records examined. So there are now potential risks to careers in backing Pru's ambition. There are, of course, risks in the other direction, especially now that the Pru's board seems to have adopted a "back us or sack us" mentality. Investors would not relish facing up to the consequences of voting down the deal. But there is now real tension and, given that the Pru needs 75% support to proceed, the outcome of the vote on 7 June seems genuinely uncertain. RiskMetrics may not be the loudest voice in the debate but it is hardly a two-bit organisation. Anyone who doubts its influence should look at yesterday's 37% vote against Rio Tinto's remuneration report. The size of the rebellion surprised observers in London, where little heat was generated about big bonuses at Rio. The explanation seems to be that RiskMetrics advised clients to vote against and its international audience heeded the call. The Pru should be worried.