AMP Ltd will abandon a planned demerger of Collimate Capital, its private markets investment business formerly known as AMP Capital, with its remaining business units set to be broken up and sold off instead.
The Australian Securities Exchange-listed firm announced to shareholders today that it had reached an agreement to sell Collimate Capital’s domestic Australian infrastructure equity and real estate business to Dexus Funds Management, a listed Australian real estate asset manager.
Dexus will pay A$250 million ($179 million; €168 million) upfront for the acquisition, which will see it acquire all Collimate Capital’s domestic funds and mandates, its management platform, its real estate and infrastructure business unit teams and a range of support teams – as well as all of AMP’s sponsor investments in real estate funds.
The domestic business has A$27.9 billion of assets under management, including A$9.7 billion in infrastructure equity and A$18.2 billion in real estate. Its domestic infrastructure equity funds include a trio of long-established open-end vehicles: the Core Infrastructure Fund, the Community Infrastructure Fund and the Diversified Infrastructure Trust, among several other vehicles and investor mandates.
AMP will also be eligible to receive further cash payments of up to A$300 million subject to AUM retention over a nine-month period after the transaction completes. AMP said, however, that it was unlikely to receive this in full “given current expected loss of AUM of approximately A$3 billion”.
The firm said it would use the proceeds to pay down corporate debt and return capital to shareholders, and that the demerger of Collimate Capital will not proceed should the sale complete.
The deal represents Dexus’s first move into the infrastructure equity business. Dexus CEO Darren Steinberg said in a statement: “Infrastructure is a logical next step for Dexus’s funds management business, underpinned by compelling sector fundamentals and a positive growth outlook. The Collimate team has a strong track record and well-established relationships with investors. This will now be enhanced by the core skills across the Dexus platform.”
In addition, AMP said it remains in discussions with interested parties over a sale of Collimate Capital’s international infrastructure equity business, which has A$9 billion in invested AUM.
Infrastructure Investor understands that Apollo Global Management and DigitalBridge are the two frontrunners for that part of the business, with Australian media reports indicating that DigitalBridge has moved into pole position. An agreement could be announced this week.
AMP chief executive Alexis George said in a statement: “The transaction announced today accelerates the realisation of value for our shareholders.
“In Dexus we have found a strong owner for the real estate and domestic infrastructure equity businesses, which will add significant value through their strong track record and experience in real estate and asset management. Their depth of talent will strongly complement our specialist teams.
“Discussions with interested parties on the sale of our international infrastructure equity business continue. Any decisions will be driven by our focus on delivering value for shareholders, leveraging the expertise of our investment teams and working closely with our clients to align an outcome that best supports them.”