AMP plots spin-off but ends Ares talks
AMP’S investors are supporting the beleaguered group’s planned spin off of its $53bn private markets business but have lamented the decision took so long, as AMP axed protracted talks with potential US suitor Ares Management.
The decision to demerge the private markets unit — which houses infrastructure and real estate investments — has also sparked the exit of controversial executive Boe Pahari. He was dramatically demoted last year when details of a prior sexual harassment claim became public.
AMP’s new plan, which follows a strategic review led by chairman Debra Hazelton, will see 172-year old AMP retain a stake of up to 20 per cent in the spun-off private markets business. The demerger transaction is expected to be complete in the first half of 2022, with the division listed on the ASX.
Sources said the division’s staff were attending a town hall meeting on Friday — led by deputy chief of AMP Capital David Atkin — to hear more about the plan. AMP’s broader employees are also being briefed on the strategy by Ms Hazelton, outgoing group chief executive Francesco De Ferrari and finance boss James Georgeson.
“The review process was long and rigorous, ideally it would not have taken so long but we have been very consistent in that the right thing for our shareholders was to thoroughly assess all the options in front of us,” Ms Hazelton told staff at the briefing.
“I do understand that for some teams in AMP Capital the prospect of working, or partnering with a successful US fund manager was very exciting. However, in the end the detailed proposal on the table did not deliver optimal value for long-term shareholders and that’s what must guide us in our decision making.”
She admitted the uncertainty around ownership of the private markets unit meant it had “been tough” for employees over recent months.
The AMP board’s decision to call off negotiations with Ares comes just a week before it fronts investors at an annual general meeting, where the board is seeking to avert a second strike against its pay report.
The latest strategic plan will see AMP continue to seek a sale or partnership for its global equity and fixed income business, while the multi-asset group is in the process of being transferred to the AMP Australia division.
Existing shareholders will receive shares in the demerged private markets unit, proportional to their holdings in AMP.
The company also said it would restart a program to buy back shares worth up to $200m.
AMP’s shares climbed in early trading on Friday as much as 7.6 per cent on news of the mooted spin off transaction, before losing ground to close 0.9 per cent up at $1.135. That is not far off record lows the stock touched this week.
UBS analysts raised issues with the proposed spin-off.
“Nine months later, it would appear that external parties have struggled to see enough value in the AMP business to warrant taking it on.” UBS said.