The two major Australasian retail fund rating firms, Zenith and Morningstar, have taken a different tack on AMP Capital following a wave of resignations and a potential break-up of the 171-year old parent company.
In a release last week, Zenith Investment Partners placed AMP Capital funds ‘under review’ citing “corporate instability” as having “the potential to result in further key investment personnel changes”.
However, Morningstar, had yet to downgrade AMP Capital, the researcher told Australian media.
“We have not changed any [AMP Capital] ratings or put any ratings under review in regards to the recent harassment allegations and changing leadership,” a Morningstar spokesperson said.
AMP Capital saw a string of high-level departures following the appointment of Boe Pahari as chief executive in July including Carmel Hourigan, global head of real estate, Genevieve Murray, head of Australian equities and David Allen, chief investment officer global equities. The corporate carnage spilled across the Tasman last week with the resignations of AMP Capital chief, Bevan Graham – who will finish at the firm in January 2021 – and head of sales, Greg McMaster.
Facing intense pressure over a 2017 sexual harassment incident that cost him A$500,000 in lost bonus money, Pahari returned to his previous head of infrastructure role late in August. The Pahari scandal also ultimately claimed AMP chair, David Murray, and long-standing director, John Fraser.
Newly appointed AMP chair, Debra Hazelton, confirmed last Tuesday (September 2), the company had hired Credit Suisse, Goldman Sachs and King & Wood Mallesons to review its entire operations with a sale – in whole or parts – the likely outcome.
“We believe there is significant uncertainty around the strategic direction of the firm, pending the completion of the business review and the appointment of a replacement CEO. In terms of corporate governance, Zenith continues to engage with AMPC to understand its progress and steps taken to align its approach with wider industry practice,” the Zenith note says.
“… Zenith will continue to monitor the developments at AMPC, seeking an improvement in corporate stability and greater clarity around the strategic direction of the firm.”
While both Zenith (via its ownership of FundSource) and Morningstar hold some sway in the NZ market, retail fund ratings tend to carry more weight in the Australian market.
But AMP Capital is also facing scrutiny from wholesale asset consultants as its internal volatility and parental review unfolds. Australian institutional investment adviser, JANA, for instance, had already placed AMP Capital ‘on watch’ in the week prior to the latest corporate review news. (JANA is also undergoing a corporate shift following the sale of its part-owner, the National Australia Bank wealth subsidiary MLC, to IOOF last week.)
It is understood several AMP Capital NZ wholesale clients have placed mandates under review in the wake of the Pahari scandal.
In a statement last Tuesday, new AMP chair, Hazelton defended the ASX-listed group’s “existing strategy, including a repivot to private markets in AMP Capital” but a corporate break-up was widely expected.
Based on AMP’s recent repurchase of the 15 per cent AMP Capital shareholding from Mitsubishi UFJ Trust and Banking Corporation for A$460 million, the A$200 billion funds management business would be worth at least A$3 billion. Meanwhile, AMP Bank could fetch up to A$1.5 billion, according to media pundits, with a similar price-tag mooted for the Australian wealth management unit.
The review has also put AMP NZ wealth management – including the KiwiSaver and corporate superannuation schemes – back into play after an earlier drawn-out sales process ended in a stalemate this May.
AMP was reportedly looking for up to A$500 million for the NZ wealth business.
US private equity concern, KKR, and Australian investment bank, Macquarie, have been noted as potential buyers for AMP assets. TA Associates, the US private equity part-owner of Fisher Funds, was also previously in the mix to purchase the AMP NZ wealth management arm.