AMP faces £190m rights shortfall

EMBATTLED Australian insurer AMP is facing a shortfall of at least A$450m (£192m) on its rights issue, as investors shun it because of uncertainty over pricing and fears of more shocks from its British business.

The A$1.2bn issue will be used to help fund AMP's demerger of its UK arm HHG after shareholders yesterday voted in favour of the A$10bn divestment.

But analysts suggest there could be a serious shortfall, because only 3% of AMP's 990,000 small shareholders are believed to have subscribed for shares when the offer closed on Monday.

Shareholders were offered A$0.77 worth of shares for every AMP share they held. Stockbroker EL & C Baillieu advised clients to do nothing with their entitlements, and instead collect the A$0.082 cash payment from AMP for each of the rights not taken up.

AMP will auction off the shortfall to institutional investors through a bookbuild on 16 and 17 December, when the final price will be set.

The exact size of the shortfall will not be known until the end of the week, but it is potentially good news for National Australia Bank, which could increase its 4.9% stake in AMP.