AMP has ended its months-long talks with Ares Management for the potential sale of AMP Capital’s private markets business and instead decided to pursue a demerger.
Ares offered a non-binding indicative proposal for troubled Australian wealth manager AMP last October. It later backed out of the offer citing declining performance of AMP’s wealth unit.
In February this year, Ares inked a non-binding agreement with AMP to take a 60% stake in the private markets business while the latter would retain the remaining 40% interest.
AMP now plans to spin off the private markets business and list it on the ASX under a new board and branding.
This move is expected to create further value in the private markets business by simplifying its structure, and offering operational independence, noted AMP.
AMP chair Debra Hazelton said: “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.”
AMP will continue to hold up to 20% in the business. Besides, it will continue to explore sale or partnership options for AMP Capital’s Global Equity and Fixed Income (GEFI) business.
In connection with the proposed demerger, AMP Capital global head of Infrastructure Equity and North West Region Boe Pahari will exit the firm.
AMP will be led by Alexis George, who will join the firm in the third quarter of the year.
The company said that it is currently on the lookout for a CEO to head Private Markets, adding that David Atkin will remain in charge of the business on an operational basis.
AMP said that it will start the internal separation of Private Markets immediately. It has named Michael Sammells as the interim chairman of the Private Markets Board.
The proposed demerger is expected to be completed in the first half of next year. It is subject to final AMP Board approval, required regulatory approvals, and nod from AMP shareholders.