AMP Limited today announces its intention to pursue a demerger of AMP Capital’s private markets business (“Private Markets”) of infrastructure equity, infrastructure debt and real estate.
The proposed demerger follows a decision by the AMP Board to conclude discussions with Ares Management Corporation regarding a potential sale of Private Markets.
The demerger would create two more focused businesses, better equipped to pursue and allocate capital to distinct growth opportunities, and realise efficiencies:
- AMP Limited: a retail-focused, wealth management, investment and banking group with scale and market-leading positions in the Australian and New Zealand markets and strategic investments in key international partnerships. AMP Limited will also retain:
- A minority stake in Private Markets of up to 20 per cent to participate in the future growth of the business
- AMP Capital’s Global Equity and Fixed Income (GEFI) business, for which AMP is currently exploring sale or partnership options; and
- AMP Capital’s Multi-Asset Group, which is in the process of being transferred to the AMP Australia business
- Private Markets: a leading global private markets investment manager with a strong performance track record in differentiated asset classes of infrastructure equity, infrastructure debt and real estate, and capabilities to expand into attractive growth adjacencies.
The proposed demerger would unlock further value in the Private Markets business by simplifying its structure, providing operational independence and enabling it to establish a new brand. Private Markets will also put in place a new management equity plan, to attract and retain talented investment professionals and management.
The targeted timeline is for the demerger to be completed in 1H 22.
As previously announced, Alexis George will be the CEO of AMP Limited and will be joining AMP in Q3 21.
An international search process for a new CEO to lead Private Markets is already underway, with David Atkin continuing to lead the business on an operational basis.
As part of the separation of Private Markets, AMP Capital’s Global Head of Infrastructure Equity and North West Region, Boe Pahari, has decided to leave the business. Mr Pahari will work closely with the Infrastructure Equity leadership team to ensure a smooth transition.
AMP Chair Debra Hazelton commented:
“Our portfolio review confirmed that AMP has two distinct businesses in retail wealth and institutional private markets, with different client bases and growth opportunities. From the extensive work that has been done we believe that operational and structural separation will significantly benefit both business units. The Private Markets business operates in growing, global markets in which investment management talent and strong client relationships are critical. While AMP Australia and New Zealand Wealth Management share the same commitment to clients, they are predominantly domestic businesses focused on wealth, banking and investment solutions for retail customers.
“Through our review, we assessed the alternatives of a sale or separation for Private Markets and found both options would support the acceleration of growth in the business. We have had substantial and constructive discussions with Ares regarding a sale, however, we have not been able to reach an agreement that would deliver appropriate value for our shareholders. The Board has therefore concluded a demerger provides investors with the strongest value outcome, creating two more focused entities, with the agility to pursue new growth opportunities in their respective markets. We will now accelerate our demerger planning, building on the preliminary work already undertaken.”
AMP will commence the internal separation of Private Markets immediately, including establishing operational independence for management, new branding and a Private Markets Board of Directors. Michael Sammells will be appointed as interim Chairman of the Private Markets Board. Mr Sammells, a non-executive director of AMP Limited and current Chairman of AMP Capital, has extensive experience with private equity and preparing a company for an ASX listing.
On demerger, existing AMP shareholders would receive shares in Private Markets proportional to their existing shareholdings in AMP Limited, after taking into account any shares to be retained by AMP. Under the proposed demerger, Private Markets is expected to be listed on the ASX.
A demerger would be subject to final AMP Board approval, required regulatory approvals, applicable consents and approval from AMP’s shareholders. Further details regarding capital structure, dividend policy, separation, management and governance will also be announced in due course.
Having concluded the portfolio review the Board will restart the share buy-back of up to A$200 million.