AMP Capital is biting back at a merger play from Dexus for its lucrative Diversified Property Fund (ADPF).
Dexus hopes to combine the ADPF with its own Wholesale Property Fund in a merger it believes will “expand and diversify” its business. But while the ADPF’s independent board has signaled support for the merger and recommended unitholders vote in favour of it, AMP Capital hasn’t – and believes it can deliver more value to shareholders.
“While we respect the (independent board’s) decision, we have strong conviction and confidence in our team and its knowledge of the ADPF portfolio. The performance of ADPF speaks for itself and we are confident that our proposal will deliver benefits to all ADPF unitholders,” said AMP Capital head of real estate Kylie O'Connor.
“We will continue to engage directly with unitholders on the benefits of our proposal and the high-quality nature of the portfolio.”
AMP Capital has put forward an “alternative proposal”, which InvestorDaily understands includes measures focused on reducing management fees, along with greater capital commitment and better investment strategy outcomes. AMP is also keeping Ares – which is in talks to acquire a significant chunk of AMP Capital’s private markets business – appraised of the situation.
“We are pleased to be able to make progress that will enable this merger to be voted on by both sets of unitholders. This merger delivers further economies of scale from a management, procurement and leasing perspective across the platform and is strongly aligned with our objective of being the wholesale partner of choice,” said Dexus chief executive Darren Steinberg.
The ADPF has around $5 billion in assets under management, with a profile that includes 50 per cent interests in the under-construction Quay Quarter Tower, 309-321 Kent Street, and a number of Westfield shopping centres, as well as a diversified portfolio of other industrial assets.
Dexus’ move comes as AMP has entered into a joint venture agreement to sell 60 per cent of its stake in AMP Capital’s private markets business. The final decision on the fate of the fund will be made by unitholders in the coming weeks.