AMP has completed a messy exit from the fund management game with the sale of the two final outstanding private markets units, scuppering earlier plans to float the rump investment business.
In a twin-set of deals inked last week, AMP will net about A$900 million in cash upfront after offloading its domestic and global infrastructure equity divisions to Dexus and DigitalBridge, respectively, with potential further earn-out gains.
“Combined with the A$430 million from the sale of the domestic infrastructure equity and real estate business announced on 27 April, 2022 and the A$578 million from the sale of the infrastructure debt platform completed in February 2022, this values the total Collimate Capital business at up to A$2.04 billion including the value of retained assets, and up to A$2.5 billion when including the maximum earn-outs,” an AMP release says.
The group also booked about A$80 million on the sale of its listed global equities and fixed income (GEFI) arm to Macquarie in a deal completed this March.
According to an AMP release, the combined asset management sales will deliver about A$1.1 billion to the bottom line of the ASX-listed company.
“As AMP finalises its capital and liquidity requirements, it is the Board’s intention to pay down a portion of its outstanding corporate debt and to return to shareholders the majority of the net proceeds from the two sales and the sales of the infrastructure debt platform and GEFI business,” the statement says. “This is likely to be via a mix of capital return and on-market share buy-back. The return of capital will be subject to requisite regulatory and shareholder approvals, and completion of the transactions. AMP will provide a further update closer to transaction completion as to the timing and quantum of the return of capital.”
The Dexus and DigitalBridge deals are expected to complete in the second half of this year.
“The board determined that, when evaluated against a demerger, the two transactions would deliver greater value and certainty for shareholders, accelerate the realisation of that value, and provide greater stability for Collimate Capital’s clients and employees,” AMP told the ASX last Thursday. “As part of the transaction, key employees in Collimate Capital have also committed to moving to the new businesses to ensure continuity for clients.”
AMP was due to float the AMP Capital private markets division, rebranded as Collimate Capital, later in 2022 following a series of debacles in the wider business dating back to a disastrous showing at the 2018/19 Royal Commission into the Australian financial services industry.
Since the Royal Commission, AMP dramatically scaled back its once-dominant financial advice arm, sold the seminal life insurance business and embarked on a staccato restructure plans for the funds management unit.
In a statement, AMP chair, Debra Hazleton, said: “Post separation and these sales, AMP Limited has a focused strategy to grow AMP Bank and the wealth management businesses under CEO Alexis George’s leadership with the benefit of a stronger capital and liquidity position.”
The remaining AMP businesses comprise a bank, the Australian financial advice and wealth management unit and the NZ wealth division.
According to the AMP 2021 annual report, the bank reported a net profit after tax of A$153 million for the year while the Australian and NZ wealth management businesses returned A$48 million and A$39 million, respectively, to the bottom line.
In the wake of the latest asset management sales the AMP share price bounced to about A$1.16, up almost 13 per cent in the day.