AMP and Ares Management Corporation Announce Intention to Pursue Joint Venture Partnership for AMP Capital’s Private Markets Businesses
Feb 25, 2021 4:05 PM
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Under the proposed transaction, Ares would acquire 60 per cent of Private Markets and assume management control, with AMP retaining 40 per cent. AMP and Ares will enter into a 30-day period of exclusivity, to work towards a binding transaction.
The partnership would facilitate an acceleration of the growth of Private Markets, while unlocking immediate value for AMP shareholders. Ares, with a current market capitalisation of more than
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 per cent for A$1.35 billionand AMP retaining the residual 40 per cent ( A$0.90 billion).
The Private Markets joint venture businesses will include:
- Infrastructure equity
- Infrastructure debt
- Real estate
- Other minority investments.
AMP to retain up to
A$0.9 billionof assets and contingent consideration related to the current private markets businesses comprising:
Seed and sponsor and related investments of approximately
Surplus capital released of
A$0.1 billion; and
Contingent consideration of up to
A$0.3 billionrelated to future performance including carried interest from existing funds.
- Seed and sponsor and related investments of approximately
Total implied value for AMP Capital’s existing private markets business of up to
AMP will retain ownership of AMP Capital’s public markets businesses, which in FY 20 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 Equitiesand Fixed Income (“GEFI”) business.
The joint venture is expected to raise
A$0.5 billionof 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 billionin 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 with six nominees from Ares and four from AMP.
- Ares and AMP to have structured call and put options, respectively, in relation to AMP’s residual holdings in Private Markets, commencing after five years.
The joint venture would enable the Private Markets business to benefit from Ares’ brand and global strengths in investment and distribution as well as already strong infrastructure and real estate capabilities, and continue to build upon AMP Capital’s well-established processes and investment capabilities, improving its scale and potential growth trajectory. At
The proposed partnership would enable AMP shareholders to benefit from both the anticipated accelerated growth of Private Markets through its 40 per cent shareholding, as well as realising value from Private Markets’ growth to date. Ares shareholders would benefit from the strategic global expansion of its infrastructure and real estate strategies which would total to over
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. AMP shareholders do not need to take any action at this stage.
The proposed transaction will mark the conclusion of AMP’s portfolio review.
During the exclusivity period3, 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.
“We believe the proposed partnership with Ares would deliver strong outcomes for our clients, our shareholders and our broader business. We expect it would strengthen the business and significantly accelerate our strategy to grow private markets, while de-risking our international expansion plans, and bringing forward the value in
“The transaction will enable AMP to increase focus on the transformation of our wealth management business in
“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.”
Founded in 1849, AMP is a leading wealth management company offering clients financial advice and superannuation, retirement income, banking and investment products across our portfolio of businesses. AMP is one of
Statements included herein contain certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which relate to future events or our future performance or financial condition. Forward-looking statements can be identified by the use of forward looking words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates" or negative versions of those words, other comparable words or other statements that do not relate to historical or factual matters. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including but not limited to the impact of the COVID-19 pandemic and the pandemic's impact on the
Ares undertakes no duty to update any forward-looking statements made herein, whether as a result of new information, future developments or otherwise, except as required by law.
In addition to factors previously disclosed in Ares’ filings with the
1 As at
2 As disclosed in Ares Management Corporation Fourth Quarter and Full Year 2020 results presentation dated
3 The exclusivity obligations are binding on AMP, but are subject to a limited fiduciary out which allows AMP group members which are trustees, managers, responsible entities or administrators to discharge their fiduciary obligations to act in the best interests of beneficiaries or unitholders.
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