AMP chair Debra Hazelton has addressed the wealth giant’s recent sale of its real estate and infrastructure business (Collimate Capital).
In an address at the company’s annual general meeting on Friday (20 May), Ms Hazelton explained the decision to sell rather than an original plan for a demerger and separate listing.
The Collimate Capital real estate and domestic infrastructure equity business was eventually sold to Dexus Funds Management for up to $730 million, while the international infrastructure equity business was sold to a subsidiary of the DigitalBridge Group, DigitalBridge Investment Holdco, for an upfront consideration of $462 million and total value of up to $699 million.
These sales came just a month after the sale of the public markets Global Equities and Fixed Income (GEFI) business for $63 million to Macquarie Asset Management.
“When considered against the demerger, the two most recent transactions were judged to deliver greater value and certainty for shareholders and accelerate the realisation of that value, while providing greater stability for Collimate Capital’s clients and employees,” Ms Hazelton said.
“The transactions also significantly strengthen our capital position which enables a sizable return of capital to shareholders, likely to be by way of on-market share buyback and capital return.
“The board has committed to returning the majority of net cash proceeds to shareholders, after allowing for the paydown of some debt.”
The transactions are expected to be completed “towards the end of this year”.
“The business has been running at a substantial loss”
In a separate address at the AGM, AMP chief executive Alexis George conceded that its advice business is projected to continue to run at a “substantial loss” this year.
Ms George said AMP is committed to improving access to financial advice for Australians, however, this year will prove to be challenging for the business in that space.
“However, the current regulatory settings mean it is very difficult for a licensee to be sustainable and profitable,” Ms George said.
“The business has been running at a substantial loss in recent years and is projected to do so in 2022.
“We are accelerating the transformation of advice by implementing a contemporary services model, embracing technology and ensuring the services provided are appropriately priced.”
Earlier this month, AMP’s Australian Wealth Management (AWM) saw a reduction in net cash outflows from $2 billion in the first quarter of last year to $1.3 billion in the first three months of 2022.
However, Ms George said AMP is striving to make its investment platform, North, the “preferred platform” for all financial advisers.
“While we have a network of aligned advisers, who know our systems well and use North, if we are to grow, we also need to engage independent financial advisers,” Ms George said.
“We’re doing this by constantly improving the capability of the platform, expanding the investment options available and ensuring we have the right relationship management in place.”
In April, after adding 13 more ESG options to its menu, North reported that assets under management (AUM) for its ESG options have grown 6.5 times faster than non-ESG investments over the last calendar year.
North’s ESG investment range increased to almost $600 million over the last 12 months to 31 December 2021.