AMP has axed efforts to sell part of its fund business to US firm Ares Management, opting instead for a ‘demerger’ that will split private markets and the remaining components into two entities by the middle of next year.
At the same time, the group revealed controversial AMP Capital head of infrastructure and – briefly – chief executive officer, Boe Pahari, would leave the firm.
In a just-released announcement, AMP said it intends to “pursue a demerger of AMP Capital’s private markets business (“Private Markets”) of infrastructure equity, infrastructure debt and real estate”.
“The proposed demerger follows a decision by the AMP Board to conclude discussions with Ares Management Corporation regarding a potential sale of Private Markets,” the statement says.
Under the plan, the restructured AMP Limited would house the group’s bank, trans-Tasman wealth divisions, the AMP Capital listed equity and fixed income business and multi-asset group (MAG) in addition to a 20 per cent stake in the new private markets entity.
“The demerger would create two more focused businesses, better equipped to pursue and allocate capital to distinct growth opportunities, and realise efficiencies,” the statement says.
Currently, the AMP Capital MAG arm is shifting to AMP Australia control while the fund manager’s global equity and fixed income (GEFI) business remains up for “sale or partnership options”, according to the statement.
The separated private markets business would contain “infrastructure equity, infrastructure debt and real estate, and capabilities to expand into attractive growth adjacencies”, the release says.
“As part of the separation of Private Markets, AMP Capital’s Global Head of Infrastructure Equity and North West Region, Boe Pahari, has decided to leave the business. Mr Pahari will work closely with the Infrastructure Equity leadership team to ensure a smooth transition,” the AMP statement says.
Alexis George remains on track to replace current AMP chief, Francesco De Ferrari, in the September quarter, while David Atkin would head the private markets arm while the group embarks on an “international search process for a new CEO”.
AMP chair, Debra Hazelton, said in the statement: “Through our review, we assessed the alternatives of a sale or separation for Private Markets and found both options would support the acceleration of growth in the business. We have had substantial and constructive discussions with Ares regarding a sale, however, we have not been able to reach an agreement that would deliver appropriate value for our shareholders. The Board has therefore concluded a demerger provides investors with the strongest value outcome, creating two more focused entities, with the agility to pursue new growth opportunities in their respective markets. We will now accelerate our demerger planning, building on the preliminary work already undertaken.”
AMP has named Michael Sammells as interim chair of the private market business ahead of a planned listing on the ASX next year. Post the failed sales process, AMP will also restart a A$200 million share buy-back program.