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LONDON (Reuters) – Britain’s largest insurer Prudential (PRU.L) has lined up more than 30 banks to sell its $21 billion rights issue, sources said, showing ample appetite for the deal backing its colossal Asian acquisition.

Deals

Prudential shares had dropped by as much as 20 percent in the last two days after it announced the $35.5 billion purchase of AIG’s (AIG.N) Asian life insurance arm.

“There are over 30 banks involved … We certainly got all the main investment banks and a lot of European banks, and we have some of the Asian banks,” one of the sources familiar with the matter said, speaking on condition of anonymity.

Prudential shares rebounded to around 498 pence from Tuesday’s low of 475.5 pence each, outperforming the benchmark FTSE 100 index .FTSE, which rose 0.9 percent.

Hedge funds do not seem to have increased their short-selling of the stock in the past few days, according to data provided by research firm Data Explorers.

The number of shares on loan out of the total outstanding stock — which serves as an indicator for short-selling — stood at 1.4 percent on Monday, roughly the level it has been at since the start of the year.

DEAL CHANCES

The proposed acquisition is putting pressure on other insurers to bulk up in fast-growing Asia, analysts and bankers have said, and could trigger a series of rival approaches and other consolidation deals.

Fears that the deal might still founder were overdone, said an investment banker covering the financial services industry who is not directly involved in the deal.

“With AIG owned by the U.S. government there will have been tremendous scrutiny of the deal and the execution risk versus the IPO before it was announced,” the banker said.

“The financing is also underwritten, and Prudential pre-sounded investors before going public.”

The cash call was underwritten initially by Credit Suisse (CSGN.VX), HSBC (HSBA.L) and JP Morgan Cazenove, who are also acting as bookrunners.

AIG had been planning to float AIA on the Hong Kong stock exchange as an alternative to a disposal and Prudential’s banks have reached out to investors who had initially lined up for the IPO to help it underwrite the issue.

“We’re not naming any (investors at this stage), but clearly all the anchors in the AIA (float) are talking to us about how they can participate, because they are not shareholders and cannot get rights,” the source said.

Banks have pledged how much of the rights issue they will underwrite, one of the sources said, even though pricing has not yet been set. (Additional reporting by Douwe Miedema and Joel Dimmock in London, Michael Flaherty and Kennix Chim in Hong Kong and Paritosh Bansal in New York, editing by Will Waterman)