Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
AMP says goodbye to the Golden Child
After recent reporting of an imminent deal, AMP Ltd (ASX: AMP) today announced the lion’s share of CollimateCapital (formerly AMP Capital) assets under management (AUM) would be sold to listed real estate giant Dexus Property Group (ASX: DXS).
The sale ends AMP’s original plan to spin off Collimate into its own independent ASX-listed company while accelerating Dexus’s move into funds management.
Dexus will purchase AMP’s domestic $31 billion infrastructure equity business for an upfront consideration of $250 million plus an earnout of up to $300 million subject to a nine-month AUM retention. AMP has already flagged that it’s unlikely the full earnout will be earned given it already expects to lose $3 billion in AUM.
Further assets could be out the door, with management of the flagship $7 billion AMP wholesale office fund speculated to change hands with Mirvac Group (ASX: MGR) after the company unsuccessfully tried to take control in September.
Dexus will also acquire all of AMP’s existing $180 million and committed $270 million in fund investments for approximately $450 million.
AMP will still retain its 24.99% shareholding and sponsor stakes at Los Angeles based non-bank lender and equity investor PCCP.
AMP intends to use the proceeds from the sale to pay down corporate debt and return capital to shareholders. However, the sale still remains subject to shareholder and regulatory approval.
The deal leaves just the $9 billion international infrastructure equity remaining within Collimate’s stable. With the business longer being demerged, AMP will continue talks with several parties who have approached the company interested in acquiring the division.
The former AMP empire, which spanned wealth, banking, insurance and funds management is now a shell of its former self.
Since the Royal Banking Commission, the business has been crippled by remediation claims and been forced to sell off divisions to simply its advice model.
The AMP share price has plunged 81% over the past five years and 93% since its listing in 1998.
Before today, the one remaining shining lift was Collimate with a capital-light business model and reasonable growth potential. It had been speculated Collimate would fetch between $1.5 to $2.0 billion as a stand-alone listed entity.
But by selling Collimate for the sum of parts AMP has decided that one in the hand is worth two in the bush.
It’s unlikely AMP will receive collectively more than $1 billion for the division, but it also
doesn’t take on the risk of losing investment mandates just as the demerged entity would begin listed life.
With the golden child largely sold, AMP is left with just a mid-tier bank, a wealth platform bleeding outflows and a loss-making advice division.
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