AMP has reached an agreement with Ares Management to sell a 60% stake in AMP Capital’s private markets businesses for A$1.35bn ($1.06bn).
The private markets joint venture businesses will include infrastructure equity and infrastructure debt, real estate and other minority investments businesses.
AMP would retain the remaining 40% stake in the AMP Capital’s private markets businesses.
Both the companies have agreed to enter into a period exclusivity for 30 days, during which the AMP group is not entitled to directly or indirectly solicit, engage with or accept any competing proposal.
Ares Management chief executive Michael Arougheti said: “We are excited to further expand our real estate and infrastructure investment capabilities through our partnership with AMP.
“We believe we can add significant value through our global scale, relationship network, investor relationships and our broad, collaborative investment platform.
“We’ve been impressed by the growth of AMP Capital’s private markets business over the past several years and our time with the team as part of the portfolio review has further cemented our view on the intrinsic value of this business under our leadership.
“We expect that this transaction would be highly strategic and complementary to our business and financially accretive for our shareholders.”
Private markets business JV to benefit from Ares’ brand and global capabilities
The joint venture partnership is expected to advance the growth of private markets businesses, while providing immediate value for AMP shareholders.
It is expected to raise A$500m ($391m) of debt to increase capital efficiency, reducing the pro rata equity contributions for each party in the joint venture.
Ares would fund A$1.05bn ($821m) in equity to the joint venture and AMP would receive expected gross cash proceeds of up to A$1.55bn ($1.21bn).
With the joint venture, private markets business would benefit from Ares’ brand and global investment and distribution capabilities.
The transaction is subject to regulatory approvals, an Independent Expert’s Report, approval by AMP’s shareholders and other customary conditions.
AMP chief executive Francesco De Ferrari said: “The transaction will enable AMP to increase focus on the transformation of our wealth management business in Australia, drive the continued growth of AMP Bank and New Zealand wealth management and benefit from driving further efficiency.
“We look forward to working towards a binding agreement with Ares, which will mark the conclusion of the portfolio review.”
