BlackRock has been tipped as lead contender to buy the in-limbo AMP Capital public markets arm now known as GEFI, for global equities and fixed income.
Last week the Australian Financial Review (AFR) named BlackRock, the world’s biggest fund manager, as front-runner for the GEFI assets, which AMP has been shopping around since last year
According to the AFR, the GEFI candidates were “recently whittled down to three potential buyers, of which Challenger was recently ruled out and sources say BlackRock is a potential winning suitor”.
March quarter AMP Capital results released at the end of April value the listed equities and fixed income assets at about A$130 billion out of the group’s total funds under management (FUM) of A$186 billion. While GEFI represents a larger proportion of its FUM, AMP has pinned its fund management future on the more lucrative private markets division, due to be spun off next year as a separate listed entity.
AMP announced the private markets strategy – comprising real estate, infrastructure and alternative assets – late in April after sale negotiations with US firm Ares Management collapsed.
The AMP Capital shake-up will also see the firm’s externally managed funds (the so-called ‘multi asset group’ or MAG) transferred to AMP Australia control, leaving GEFI for sale or rent.
Departing AMP chief, Francesco De Ferrari, said post the March quarter results: “We are continuing to make progress on potential sale or partnership opportunities for our GEFI teams and will provide an update when we can.”
Most of AMP Capital NZ assets now fall under the GEFI aegis after sister business, AMP wealth NZ, hired BlackRock last year to manage its KiwiSaver and superannuation fund assets. AMP NZ is currently gearing up to transition the AMP Capital funds to BlackRock with about $9 billion to $10 billion likely to change hands. A BlackRock purchase of GEFI would add another interesting twist to the already complex relationship between the AMP NZ wealth and funds management companies.
Until the GEFI matter is settled, however, AMP Capital NZ last week named Auckland-based consultant, Michael Gray, in a caretaker head of investments role.
Gray officially joined the organisation on April 27 under a contract due to expire this October as “AMP Capital progresses its strategy to explore sale or partnership options”, a group statement says.
His appointment follows an exodus of senior AMP Capital NZ staff over the previous nine months including: chief, Bevan Graham; head of sales, Greg McMaster; and, head of investment strategy, Greg Fleming. All three AMP Capital NZ executives now work for Salt Funds Management.
Rebekah Swan, who took over as AMP Capital NZ chief last year, said in the release: “Michael’s experience will be invaluable in the changing shape of the New Zealand business and meeting the needs of our clients.
“This is a key appointment for the New Zealand business, working in partnership with our New Zealand and global investment teams to achieve outstanding results for our clients.”
Before launching his consulting business, Gray was most recently senior portfolio manager for Auckland wholesale investment shop, Caliber. He previously held high-level positions in both Australia and NZ with firms including Suncorp, CommInsure, ASB and Goldman Sachs.
Last week the ASX-listed AMP just escaped an embarrassing shareholder rejection of its remuneration report tabled at the group’s AGM.
Almost 24 per cent of AMP shareholders voted against the remuneration proposal, just shy of the 25 per cent threshold that would’ve seen it knocked back.
A vote on remuneration terms for chief De Ferrari, due to leave the firm by September, was withdrawn.
At the AGM, Debra Hazelton, AMP chair, defended the use of staff retention payments.
“Our business has been through an extraordinarily challenging period and the Board believed that retention of key leaders, investment teams and other business critical employees is essential to continue to drive transformation and protect shareholder value. We were in unprecedented circumstances and had to ensure stability,” Hazelton told the AGM.
“However, we have heard and understand your feedback and, in normal circumstances, would absolutely concur.”
AMP share price was down almost 2 per cent last Friday, closing at A$1.11.