Struggling AMP has sold a stake in its key asset, AMP Capital to its one time US suitor, Ares in a $2.25 billion transaction.
Ares launched an indicative non-binding offer for AMP at $1.85 a share but the deal could not get to completion and Ares withdrew earlier this month.
It was always though the Ares really wanted all or most of AMP which is the best asset in the struggling AMP.
The latest non-binding agreement would involve splitting up AMP Capital to form a new business that includes its infrastructure equity and debt, real estate and other minority assets.
Ares would own 60% of the venture.
Ares will take a 60% stake of the new business for $1.35 billion and AMP would retain 40% valued at $900 million.
Ares would take management control and a new 10-seat board would be set up, Ares having six seats and AMP with four.
AMP would retain its international and Australian equities portfolio, valued at $900 million, which it said made a “modest” contribution to profits last financial year.
These assets would be transferred to AMP Australia and the group would continue to actively explore sale options for its global equities and fixed income business.
AMP said in a statement the joint venture would enable the private markets business to benefit from Ares’ brand, investment and distribution capabilities.
“The proposed partnership would enable AMP shareholders to benefit from both the anticipated accelerated growth of private markets through its 40 per cent shareholding, as well as realising value from private markets’ growth to date,” AMP said.
The two parties have entered a 30-day period of exclusivity to work towards a final deal. AMP said the deal was subject to regulatory approvals, an independent experts’ report and approval by AMP’s shareholders.
AMP chair Debra Hazelton and chief executive Francesco De Ferrari said in a statement on Friday they believed the proposal would deliver “strong outcomes for our clients, our shareholders and our broader business”.
The deal will need approval from AMP shareholders.
