AMP has announced that the first stage of the sale and transfer of the AMP Capital real estate and domestic infrastructure equity business to Dexus Funds Management will be completed on March 24, in a deal worth approximately $337 million.
The deal will take place after both parties enter into an unconditional agreement on a revised transaction structure for the sale of the business.
At first completion, AMP will receive $337 million in payment from Dexus comprising:
- $175 million of the $225 million base purchase price for the real estate and domestic infrastructure equity business
- $105 million for sponsor investments
- $57 million for the cash, net of the remaining liabilities, held on the business’ balance sheet
The remaining $50 million of the base purchase price will be paid contingent on the transfer of AMP’s interest in China Life AMP Asset Management Company (CLAMP) out of the sale perimeter by Sept. 30, 2024. After that transfer, the remaining AMP Capital legal entity will move to Dexus, leading to the final completion of the transaction.
Part of the delivery of AMP’s simplification strategy, the deal follows the divestment of the remaining interest in AMP Life, the sale of AMP Capital’s Global Equities and Fixed Income business, the Infrastructure debt platform, and the International infrastructure equity business.
“Completion of the sale of the remaining AMP Capital business will mark the delivery of a key pillar of our strategy to simplify AMP,” said Alexis George (pictured above), AMP CEO. “The sale allows AMP to have a clear focus on our go forward businesses of retail banking and wealth management in Australia and New Zealand. We will continue to build on the hard work of the past 12 months to position AMP to win in those markets, deliver for customers, and drive value for shareholders.”
Next phase of AMP’s simplification strategy
With the remaining AMP Capital transaction soon to be completed, AMP’s simplification will move into its next phase with a comprehensive review of its balance sheet and its cost base. The review will be conducted with the aim of returning excess liquidity to shareholders and/or reducing outstanding debt.
“The review will consider, amongst other things, if AMP is holding any further surplus capital and the appropriate cost base for AMP going forward,” George said.
AMP has identified surplus capital of $500 million which it plans to retain. After completion of the review, the company will reconsider the return of excess liquidity.
Over the next six months, AMP will determine the appropriate operating model and cost base for the future business that will reflect the forward-looking focus on the bank and the Australian and New Zealand wealth management businesses, together with the China partnerships.
The outcomes of the reviews, including the quantum and intended use of any identified surplus liquidity and timing for delivery of identified cost savings, will be released to shareholders no later than the announcement of its 1H 23 results in August. AMP said it does not intend to make any material acquisitions whilst the reviews are ongoing or prior to their outcomes being announced.
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