AMP is on track to offload or outsource its listed equities and fixed income business, departing chief, Francesco De Ferrari, told clients last week.
In the wake of aborted attempts to sell first the whole AMP, then part of the fund arm to US-based Ares Management, the company announced plans last Friday (April 23) to spin-off the private assets business into a new ASX-listed entity.
Under the proposed restructure, both the Multi Asset Group (or MAG – comprising externally managed funds) and the in-house Global Equities Fixed Income (GEFI) business would remain in the existing AMP company.
While MAG, previously an AMP Capital responsibility, is already en route to AMP Australia, the future of GEFI is less certain. Most of AMP Capital NZ money falls in the GEFI camp.
De Ferrari, due to be replaced by Alexis George as AMP chief in the September quarter, said in the client update last Friday: “We are continuing to make progress on potential sale or partnership opportunities for our GEFI teams and will provide an update when we can.”
He said the proposed “demerger” was aimed at “creating a strong, independent future” for the AMP Capital private assets division.
“The Board has determined that a demerger will provide our clients with the optimal structure to provide stability, including operational independence,” De Ferrari said. “The demerger will create a focused private markets business that is better equipped to pursue and allocate capital to distinct growth opportunities.”
Post the divorce, AMP would keep a 20 per cent stake in the private markets entity. Current AMP equity holders would also receive proportionate shares in the private markets business.
The rump AMP business would contain the Australian and NZ wealth management arms, a bank, MAG and whatever remains of the in-house investment capability.
Quarterly results released by the firm last week ahead of its AGM on April 30 show most AMP businesses struggled over the first three months of 2021.
AMP Capital reported net outflows of almost $A3 billion over the March quarter with most asset classes – bar infrastructure – in the red. As at the end of the period, the manager held about A$186.5 billion, of which about A$130 billion was in equities or fixed income.
Despite losing about A$1.5 billion in net outflows, the Australian wealth management arm – a complex mix of platforms, superannuation products and financial advisers – grew assets by about A$1.6 billion to hold a total A$143 billion plus by March 31.
AMP NZ wealth, however, saw assets under management shrink by more than A$200 million over the quarter as outflows from its non-KiwiSaver products hit home: the firm blamed COVID-19, “increased competitor activity” and the loss of a corporate super client for the quarterly decline.
It is understood the AMP NZ Retirement Trust (NZRT) has seen a couple of smaller corporate clients exit in recent months as the business prepares to transition to a mostly passive investment strategy managed by BlackRock. Under the move, which also applies to the $6 billion plus KiwiSaver scheme, over $9 billion previously managed by AMP Capital NZ will shift to BlackRock control. In total AMP NZ wealth reported about $13 billion under management as at the end of March.
Meanwhile, the AMP NZ distribution influence is largely centred on its majority owned AdviceFirst network. A large group of advisers previously aligned with AMP now sit in the independent Wealthpoint group. Wealthpoint recently updated its investment list while also approving the Consilium platform for advisers to compete with the AMP-owned WealthView: both Consilium and WealthView operate on FNZ technology.
AMP has set a prospective demerger date for some time in the first half of next year, also promising to restart a delayed A$200 million share buyback. Shares in AMP moved up almost 1 per cent on the news last Friday, closing the week at A$1.135.