AMP announced Friday that it had reached a non-binding deal with US-based Ares Management to split up AMP Capital and spin it off to Ares, confirming an earlier Reuters report that the deal was back on.
The deal will form a new business managing its infrastructure, real estate and other minority assets, according to a report by The Sydney Morning Herald. Ares will pay $1.35 billion for 60% ownership of the new business, while AMP will retain 40%. Ares will manage the business and have the majority of board seats.
AMP’s sale looked dead in the water last month after Ares withdrew its bid to buy 100% of the business. However, the new deal will “turbocharge” AMP’s plans to expand its private markets investments, AMP chief executive Francesco De Ferrari told the Herald. De Ferrari said he had “absolutely not” lost faith in AMP’s ability to manage the business.
“Clearly, if you look at the future of AMP, we have a leading wealth business in Australia, a great little bank that’s tech and digital only that can really grow significantly in this environment,” he said. “If this transaction does eventuate, we will have a series of strategic partnerships.”
Read more: AMP deal back on
AMP Capital will be split between its private markets operations and public markets, the Herald reported. The deal with Ares will split the private markets operations while AMP continues to look for a buyer for its public markets assets.
The deal follows the sale of AMP Life, which was finalised in July. AMP will retain a minority stake in both cases, “but effectively these businesses are run by someone else,” De Ferrari said.
De Ferrari told the Herald that AMP has put in place retention mechanisms to protect its staff in the event of a finalised deal with Ares.