AMP could scrap spin-off plan as it confirms Dexus talks

AMP could dump a long-running plan to spin off its private markets arm and instead sell off the business after the wealth manager confirmed it was in talks with potential buyers including property giant Dexus about a possible deal.

Amid mounting speculation that AMP was considering selling its private markets business Collimate Capital, which manages tens of billions of dollars in real estate and infrastructure assets, AMP on Tuesday said it was talking to “multiple parties” about a possible sale, singling out Dexus.

Under AMP chief executive Alexis George’s turnaround strategy, a top priority has been to de-merge Collimate, previously known as AMP Capital, thereby leaving the rest of AMP to focus on retail wealth management.

But as talks with potential buyers including Dexus heat up, AMP’s board must now consider whether shareholders and clients would be better served by the company selling parts or all of Collimate to another asset manager.

For Dexus, led by chief executive Darren Steinberg, buying Collimate would expand its footprint in the sought-after office market, while also giving it access to AMP’s major institutional clients as it pushes further into funds management.

If AMP does change course and sell some or all of Collimate — which could possibly be announced later this week or early next week — it would be the latest sign of potential consolidation in funds management, alongside Perpetual’s $2.4 billion bid for rival Pendal earlier this month. AMP did not name other potential bidders for Collimate, but a market source said another party looking at Collimate was Home Consortium, led by former UBS banker David Di Pilla.

Although press reports estimated AMP and Dexus were getting close to a deal worth about $300 million, some equity analysts have a higher valuation on Collimate, which AMP is aiming to spin-off in the second half of this year.

Barrenjoey analyst Andrew Adams said his estimate of Collimate’s value was about $1 billion, but the figure depended on how costs were accounted for. “The hard thing for AMP is there’s this big corporate cost base and we don’t really know where it all goes,” Adams said.

Jarden analyst Kieran Chidgey said either the demerger or a potential trade sale of AMP’s Collimate business was a “catalyst that could drive value realisation across AMP”.