Macquarie analysts believe that Ares’ proposed joint venture for AMP Capital’s private markets division represents a discount of about 25 per cent to its market value, signalling “ongoing pressure on institutional mandates”.
“On our numbers, we do not see how AMP could agree to the deal in the form disclosed to the market. Should the jewel in the AMP crown be sold at such a steep discount, it would signal an even worse underlying state of the group (and AMP Capital division) than we are forecasting,” Macquarie said in the note, titled “Beggars Belief”.
Macquarie values the private markets division at $3 billion – the public markets business, which it refers to as “scraps”, is valued at $300 million – saying “We would be surprised if the arrangement proceeded with the currently disclosed deal metrics.”
“Threat of institutional mandate losses is likely the reason for the variance, but based upon publicly available data, still appears to be a very material discount,” Macquarie said.
The joint venture as it stands values the private markets division at $2.25 billion, with Ares acquiring its 60 per cent stake for $1.35 billion in a move that AMP hopes will give it greater global distribution while allowing it to concentrate on Australian and New Zealand wealth management.
“They bring significant scale to our great product and we bring the great product and the client proximity…we’re really excited about the potential this Ares partnership can unlock for our investors, for our teams and for our shareholders,” AMP chief executive Francesco de Ferrari said at the time.
Mr De Ferrari also flagged the possibility of the sale of AMP’s fixed-income business and recently offloaded the global companies capability to Canadian investment manager Fiera Capital for an undisclosed amount.