AMP shares bounced in early trading on Friday after investors took heart that the mooted deal with US investor group, Ares had finally fallen over.
A day after the shares had hit an all-time low of $1.105 in trading after news of more fund outflows in the March quarter, the shares rose more than 3% in the first half hour to trade around $1.16 on Friday.
Although many analysts and shareholders had regarded the Ares deal as dying on the vine after the US group pulled ended due diligence earlier this year, talks had continued between the two group about Ares buying a stake or taking over all of AMP Capital.
Those talks went nowhere and now AMP will spin off and separately list AMP Capital’s private markets business, and controversial senior executive Boe Pahari will leave the company.
AMP said AMP Capital’s private markets business will have a new board, independent management and fresh branding. AMP will retain a 20% stake in the business and Mr Pahari will resign.
The spin-off is similar to the way Wesfarmers sold off Coles – it kept a 15% stake in Coles and sold that down over the next few months after the deal took place in late 2018.
AMP said it would manage its private markets assets internally but will continue to seek a sale partner for its global equity and fixed income business.
AMP chair Debra Hazelton said in a statement to the ASX the company had had “substantial and constructive discussions” with Ares regarding the sale, but ultimately these had failed.
“We have not been able to reach an agreement that would deliver appropriate value for our shareholders,” she said.
“The board has therefore concluded a demerger provides investors with the strongest value outcome, creating two more focused entities, with the agility to pursue new growth in opportunities in their respective markets.”
Mr Pahari was demoted in 2020 from AMP Capital chief executive after an investor revolt of the board’s handling of a sexual harassment complaint against him.
The group has launched an international search process for the chief executive of the new private markets business, while David Atkin continues to lead the business in the interim. “Mr Pahari will work closely with the infrastructure equity leadership team to ensure a smooth transition,” AMP said on Friday.
AMP announced in September of last year that it was putting AMP Capital business up for sale but has now closed the “portfolio review” without finalising any deals.
Ares was the only potential buyer to emerge from the process when it revealed a $1.85 a share, $6 billion whole-of-company takeover bid last October, which sent AMP’s share price soaring by almost 20%.
AMP also confirmed on Friday that ANZ Deputy CEO, Alexis George would become the new CEO in July.