Australian financial services giant AMP has set out plans to pursue a demerger of AMP Capital’s private markets investment management division.
This is going to create two businesses which, the firm said, will be “better equipped to pursue and allocate capital to distinct growth opportunities and realise efficiencies”.
The two firms will be:
- AMP Limited: the retail-focused, wealth management, investment and banking group. It will retain a minority stake in the private markets business of up to 20% to participate in its future growth. AMP Capital’s global equity and fixed income business and the multi-asset group will remain with AMP as well.
- Private Markets: it will create a global investment manager in the private markets space, with a focus on differentiated asset classes such as infrastructure equity, infrastructure debt and real estate.
The move follows the collapse of M&A talks between the Australian firm and US-based investment firm Ares Management, which was interested in acquiring the business AMP is now looking to spin out.
As part of the demerger, AMP Capital’s global head of infrastructure equity and north west region, Boe Pahari, will leave the business.
AMP expects the split to be completed in the first half of 2022.
Support growth acceleration
AMP chair Debra Hazelton said: “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.”
