A flock of US private equity firms is circling the AMP NZ wealth unit including two businesses with strong local links, Australian press reported last month.
According to The Australian, both TA Associates and Blackstone are likely bidders for the AMP NZ business, which allegedly comes with a full-freight sticker price of $600 million.
TA Associates and Blackstone have large minority shareholdings in Fisher Funds and Partners Life, respectively.
Coincidentally, last week TA Associates put another of its global fund management assets – Russell Investments – on the block.
The Australian also named The Carlyle Group, one of the world’s biggest private equity businesses, US venture investment firm Bain Capital and the NZ government-owned Kiwibank (although the more probable entity involved is owner Kiwi Group Holdings) as interested parties in the AMP deal.
While AMP might fit well with Kiwi Group (which includes Kiwi Wealth), both TA Associates and Blackstone have ‘synergy’ claims on the in-limbo NZ financial services business.
TA Associates, for example, would likely look to merge the business with its other part-owned local asset, Fisher Funds, which offers many of the same services as AMP such as KiwiSaver and a corporate superannuation master trust.
At the same time, Blackstone could bring the band back together by attaching the AMP NZ wealth management arm to Partners Life. The ASX-listed AMP sold its life insurance business to Resolution Life last year, which, after a regulatory hiccup and renegotiation of terms, is due to settle in the first half of next year.
Operationally, however, AMP has already separated its life businesses both in Australia and NZ.
AMP is seeking between $450 million and $600 million for the NZ wealth division, The Australian reported but local industry insiders rate even the lower figure as optimistic.
The ASX-listed AMP group slated the NZ wealth arm for sale or listing about two years ago, branding the Kiwi unit as ‘manage for value’ at the time. After the parent group suffered a huge backlash in the wake of the Royal Commission into financial services, the Australian business has opted for a narrower, focused strategy under new chief, Francesco De Ferrari.
AMP dropped its planned IPO for the NZ business in August in favour of a trade sale. The AMP NZ financial services arm holds about $13 billion in funds under management (through its KiwiSaver, corporate super master trust and retail wrap platform) and has, perhaps, 60 financial advisers split between in-house employees and the AdviceFirst group.
Last week AMP reiterated its plans to offload the NZ business in an investor note detailing a new A$200 million capital raising.
The investor note cites the NZ operation as a “market consolidation opportunity” that offers a “competitive advantage for local players” featuring a “uniquely positioned employed advice business”
AMP also describes the NZ wealth management division as a “high return business” with reported operating earnings in the first half of this year reaching A$22 million.
The AMP NZ arm had a ‘return on business unit equity’ of 45 per cent compared to 27 per cent for the Australian wealth management operation and 52 per cent for AMP Capital.
NZ investment bank Jarden is advising on the sale along with Credit Suisse in Australia.