Ares Management will buy 60 per cent of the AMP Capital private markets investment business in a proposed deal announced this morning.
After ditching efforts to by all of the ASX-listed AMP in February, the US investment firm has instead opted for a more limited joint-venture arrangement to be explored over the next 30 days in a just-inked non-binding heads of agreement.
Under the deal Ares would acquire the majority stake in the AMP Capital infrastructure debt, real estate and other “minority interests” valued at A$2.25 billion, according to a release issued this morning.
“AMP will retain ownership of AMP Capital’s public markets businesses, which in FY 20 made a modest NPAT contribution,” the statement says. “The public markets strategy will continue, including the Multi-Asset Group (“MAG”) being transformed and transferred to AMP Australia, and actively exploring sale or partnership opportunities for the Global Equities and Fixed Income (“GEFI”) business.”
Most of AMP Capital NZ assets fall under the public markets strategy.
Debra Hazelton and Francesco De Ferrari, AMP chair and chief respectively, said in the release:
“We believe the proposed partnership with Ares would deliver strong outcomes for our clients, our shareholders and our broader business. We expect it would strengthen the business and significantly accelerate our strategy to grow private markets, while de-risking our international expansion plans, and bringing forward the value in AMP Capital for our shareholders. The joint venture would also enable AMP shareholders to participate in anticipated accelerated growth from a business with increased global scale and capability.
“The transaction will enable AMP to increase focus on the transformation of our wealth management business in Australia, drive the continued growth of AMP Bank and New Zealand wealth management and benefit from driving further efficiency. We look forward to working towards a binding agreement with Ares, which will mark the conclusion of the portfolio review.”
However, AMP says “there is no certainty” that the JV would go ahead.
Ares Management chief, Michael Arougheti, said in the statement: “We are excited to further expand our real estate and infrastructure investment capabilities through our partnership with AMP. We believe we can add significant value through our global scale, relationship network, investor relationships and our broad, collaborative investment platform. We’ve been impressed by the growth of AMP Capital’s private markets business over the past several years and our time with the team as part of the portfolio review has further cemented our view on the intrinsic value of this business under our leadership. We expect that this transaction would be highly strategic and complementary to our business and financially accretive for our shareholders.”