Deal will more than double the size of Dexus funds business
AMP is reportedly preparing to announce a breakup of its asset management business, scuttling hopes of a demerger that would see the wealth management company list its Collimate Capital unit on the ASX.
The spin-off is being dropped in favour of breaking up and selling AMP’s real estate and infrastructure businesses, The Australian reported. The local AMP private markets operation, Collimate Capital, is reportedly being acquired by Dexus. The deal is expected to be between $200 million and $300 million.
The acquisition would more than double the size of the Dexus funds business from about $27 billion currently, and would be debt-funded, The Australian reported.
The international business will be pitched as the best exit for shareholders if AMP can find a good price, The Australian reported. US firms Apollo Global Management and DigitalBridge are currently in contention to buy the international business.
The sales could also bolster AMP’s balance sheet and give the company breathing room to pursue its strategies in its remaining banking and wealth management businesses, according to The Australian. AMP has been plagued for the last four years by underperformance and governance issues.
AMP remains one of Australia’s largest wealth brands, and it may look to reboot its bank and wealth divisions after years of troubles. The collapse of the private-markets spin-off plan, however, may spur a sell-off of the remaining AMP assets, The Australian reported. Collimate Capital has about $44 billion in assets under management, with the real estate business slightly larger than infrastructure.
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Scuttling the demerger will save on corporate costs associated with listing Collimate Capital on the ASX. The business has a team of about 500 real estate professionals, with more than 50 investment professionals in the infrastructure equity business. The real estate business has 59 institutional clients, mostly in Australia, while the infrastructure equity business has more than 245 institutional clients, The Australian reported.
Dexus is being pitched as the best platform to stablise and rebuild AMP’s real estate operation. The company is also pitching its deep ties to local and offshore funds as a signal that it can also house the infrastructure unit, which will remain separately governed, The Australian reported. The deal could bring some certainty to investors after years of corporate government issues and departures of key executives.
