Ares eyes AMP Capital after withdrawing bid for parent AMP Ltd

AMP Capital generated A$139m in profit in FY 2020, a higher figure than either of AMP Ltd’s other two main divisions, but a 32% drop compared to FY 2019.

US-based alternatives fund manager Ares Management Corporation has withdrawn its takeover bid for AMP Ltd, but remains in discussions over subsidiary AMP Capital.

AMP Ltd told shareholders today that it had been advised by Ares on 10 February that it did not intend to proceed with its non-binding indicative proposal for 100 percent of AMP Ltd, AMP Capital’s parent company, of A$1.85 ($1.43; €1.18) per share.

The firm said it continues to “engage constructively” with Ares, though, in relation to AMP Capital, as part of its wider portfolio review.

AMP Ltd commenced the portfolio review in September 2020 that included all its assets and businesses, following the appointment of chair Debra Hazelton. Her appointment came after previous incumbent David Murray stood down amid pressure from shareholders over how the firm handled allegations of sexual harassment made against former AMP Capital chief executive Boe Pahari by a female subordinate in 2017.

In its results for FY 2020, also announced to shareholders today, AMP Capital generated A$139 million in profit, a higher figure than either of AMP Ltd’s other two main divisions, its Australian wealth management arm and AMP Bank.

AMP Capital’s profits were down year-on-year by 32 percent however, falling from A$204 million in FY 2019.

AMP Capital saw net external cash outflows in the year of A$1.7 billion, with positive cash inflows of A$2.4 billion in infrastructure and A$0.7 billion in real estate offset by cash outflows of A$4.8 billion in public markets.

It deployed A$3.5 billion of capital from its infrastructure debt and infrastructure equity fund series in FY20, with A$4.1 billion of uncalled capital available to be deployed at the end of the year. This included A$1 billion in infrastructure debt and A$1.8 billion in infrastructure equity.

Profits were down because transaction and performance fees and sponsor results were adversely affected by covid-19’s effect on infrastructure and real estate assets, AMP Ltd said. The firm’s total AUM decreased by 7 percent to A$189.8 billion (from A$203.1 billion in FY19), while average AUM over the year also decreased to A$193.8 billion.

AMP Ltd said that, following the collapse of the Ares takeover for the whole business, its transformation strategy for the AMP Australia (Australian wealth management and AMP Bank) and New Zealand wealth management businesses was likely to be the optimal outcome for shareholders, therefore concluding the portfolio review for those assets.

In a statement, AMP Ltd chief executive Francesco De Ferrari said: “2020 was a tough year across the world. Covid-19 unsettled our clients, our workplaces and the broader community.

“Within our business, it was also an extraordinary year, with significant internal change and the initiation of a portfolio review in 2H20. The review has made good progress, assessing options for the group’s assets and businesses, and we are confident of bringing it to a conclusion in the near future.”