Ares Management makes bid to acquire AMP Limited

Discussions at a 'very preliminary stage' as the US fund manager, which has extensive energy experience, makes an offer for AMP Capital’s parent company.

AMP Limited, parent company of AMP Capital, has received a non-binding indicative takeover offer for 100 percent of its shares from US-based alternatives fund manager Ares Management Corporation.

The bid was announced to shareholders today following AMP’s commencement of a portfolio review in September that includes all its assets and business units.

At the time, AMP Ltd said it had seen an increase in unsolicited interest following a drop in its share price after high-profile controversies following the Royal Commission into Banking and Financial Services and the controversial appointment of Boe Pahari to lead AMP Capital.

The firm decided to launch the portfolio review to explore those opportunities further, with a focus on maximising shareholder value.

The value of Ares Management’s bid has not been disclosed and AMP said discussions were at “a very preliminary stage”.

The portfolio review will continue, with AMP saying it has received “significant interest” in its assets and businesses so far.

Profit centre

Funds management arm AMP Capital is the company’s most profitable business unit by some distance, outstripping AMP Bank and its wealth management business in Australia and New Zealand.

In a Q3 2020 portfolio update issued last week, AMP Capital said that its assets under management reduced by 0.4 per cent to A$189.2 billion ($133 billion; €114 billion) in the quarter, reflecting cash outflows, and average AUM decreased to A$189.8 billion (from A$191.9 billion in Q2 2020).

AMP Capital experienced net external cash outflows of A$1.1 billion, primarily due to redemptions from public markets products, the firm said.

Ares Management’s current infrastructure exposure is mostly in energy, including in US renewable energy, pipelines and energy transportation, and natural gas-fired generation.

The firm deployed $390 million in 2019 across five transactions in the US, including the acquisition of a 525MW windfarm development in Texas, a California-based battery storage company and a landfill gas portfolio in Pennsylvania.

It has completed more than 150 energy and infrastructure investments in 39 US states, and in Canada, equating to more than 40GW of power generation and transmission capability, more than 1,000 miles of pipeline and more than 30,000 MMBtu/days of renewable natural gas.