U.S.-based Ares Management plans to buy 60% of the private markets business of AMP Ltd’s asset management arm for A$1.35 billion ($1.06 billion), the pair said on Friday, weeks after scrapping a bid for all of the Australian company.
AMP shares on Friday surged 6.5%, far outperforming its peers and a broader market deep in the red, to A$1.485 – their biggest rise since November last year.
Under the deal, the Australian wealth manager will retain 40% of AMP Capital’s private markets business, worth A$900 million, which deals in infrastructure and real estate investments. The whole joint venture is valued at A$2.25 billion.
Earlier in February, AMP said Ares had withdrawn a A$6.36 billion takeover proposal for the whole company, instead continuing talks over AMP Capital – considered its most valuable unit.
The wealth manager has lost two-thirds in value and struggled to repair its reputation since a 2018 public inquiry into the financial sector found AMP misled regulators and engaged in misconduct.
With the proposed deal, AMP’s portfolio review launched last September comes to an end, the company said, adding that it and Ares now had 30 days to exclusively work toward a binding agreement.
It also said it was “actively” exploring the sale or a partnership deal for its global equities and fixed income business, while keeping ownership of AMP Capital’s public markets business.
Through the joint venture, AMP will be able to leverage the global presence of Ares, which had $197 billion in assets under management at the end of December.
“We’ve been impressed by the growth of AMP Capital’s private markets business over the past several years,” Ares’ CEO Michael Arougheti said in a joint release.
He added that Ares’ time with AMP during its portfolio review “further cemented our view on the intrinsic value of this business under our leadership.”
($1 = 1.2721 Australian dollars)