AMP has sold its real estate and domestic infrastructure equity business to Dexus Funds Management in a deal valued at about $250 million, and is still looking to offload other parts of its shrunken empire.
After weeks of speculation, AMP announced on Wednesday it had reached an agreement to sell part of AMP Capital spin-off Collimate Capital to leading real estate investor Dexus, but the remainder will be sold in a second transaction in due course.
The Dexus deal includes an upfront cash payment of $250 million with an additional $450 million after further negotiations with fund investors for associated assets.
AMP said it will also be eligible to receive a further cash earn-out of up to $300 million, subject to Assets Under Management (AUM) retention over a nine-month period after completion, but doubts that will happen.
“AMP considers it unlikely the full earn-out will be received given current expected loss of AUM of approximately $3.0 billion,” the statement revealed on Wednesday.
The Dexus sale involves $31 billion in assets under management, including domestic real estate of $21 billion and infrastructure equity of $10 billion, as well as the management platform and key investment professionals.
AMP said discussions would continue with potential suitors for Collimate’s international infrastructure equity business, “after receiving a number of approaches from parties interested in acquiring the business”.
Sydney-based property developer and investor, Mirvac is reported to be an interested party for these assets.
“AMP will continue these discussions with a focus on maximising the value for shareholders by achieving the best outcome for clients and other stakeholders,” the company said.
Following the deal, AMP said it will no longer pursue a demerger of Collimate Capital.
AMP chair Debra Hazelton said the sale was a “strong outcome for AMP shareholders and Collimate Capital stakeholders”.
“As we work towards completing the transaction, a key priority for our board will be returning capital to AMP shareholders in acknowledgement of their patience as we have pursued options to maximise value for them.
“We continue our discussions on the remaining international infrastructure equity business in order to achieve the best outcomes for AMP shareholders, clients and our teams.”
AMP chief executive Alexis George said the deal would create real value for 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.
In a separate statement, Dexus said it would fund its cost from its own resources without the need to borrow.
AMP shares eased 0.9% on the news to $1.025 and Dexus shares were up 1.9% at $11.
