AMP Capital: Ares and AMP pursue 60/40 partnership

AMP and Ares Management Corporation have today announced that they have entered into an agreement to pursue the formation of a joint venture for AMP Capital’s private markets businesses.

Friday, February 26th 2021, 12:23PM

The proposed transaction would see Ares acquire 60% of private markets and assume management control, with AMP retaining 40%.

AMP and Ares have today entered into a 30-day period of exclusivity, to work towards a binding transaction.

The key components of the proposed transaction are as follows.

A private markets joint venture valued at A$2.25 billion (excluding retained assets and contingent consideration outlined below) with Ares acquiring 60% for A$1.35 billion and AMP retaining the residual 40% (A$0.90 billion).
AMP to retain up to A$0.9 billion of assets and contingent consideration related to the current private markets businesses.
AMP will retain ownership of AMP Capital’s public markets businesses, which in FY20 made a modest NPAT contribution. The public markets strategy will continue, including the multi-asset group (MAG) being transformed and transferred to AMP Australia, and actively exploring sale or partnership opportunities for the global equities and fixed income (GEFI) business.
The joint venture is expected to raise A$0.5 billion of debt to maximise capital efficiency which would reduce the pro rata equity contributions for each party in the joint venture. Therefore, under this assumption, Ares would fund A$1.05 billion in equity to the joint venture and AMP would receive expected gross cash proceeds of up to A$1.55 billion (before separation costs and capital release).
The board of the private markets joint venture would initially comprise 10 board seats – six nominees from Ares and four from AMP.

If agreed, the transaction will be subject to regulatory approvals, an independent expert’s report, approval by AMP’s shareholders and other customary conditions precedent, including change of control approvals.

The proposed transaction will mark the conclusion of AMP’s portfolio review.

During the exclusivity period, the AMP Group must not directly or indirectly solicit, engage with or accept any competing proposal (including any proposal that may prevent, prejudice or jeopardise the transaction as well as a change in control of AMP), or any inquiries, indications of interest, offers or discussions with, or furnish any information to, any third party in relation to a competing proposal, or that could reasonably be expected to lead to a competing proposal or to AMP not proceeding with the transaction.

There is no certainty that a transaction will proceed, or the terms on which it would proceed.

Tags: AMP AMP Capital Ares