AMP and Dexus are on the cusp of a deal that will allow the diversified property player to take a significant chunk of the wealth manager’s prized $44 billion funds management arm and boost Dexus’ status in the listed real estate sector to third-largest fund management platform.
Sources close to the transaction said AMP and Dexus were expected to finalise arrangements on Wednesday after several days of “dotting i’s and crossing t’s” on a sale and purchase agreement.
AMP, led by chief executive Alexis George, ditched a long-running plan to spin off its private markets arm Collimate Capital, and after approaches from interested buyers, investigated selling the business. It confirmed a week ago it was in discussions with Dexus about a potential deal.
Collimate, previously known as AMP Capital, has $44 billion in infrastructure and real estate assets, but Dexus is angling to secure its $31 billion local property and infrastructure platform.
Tribeca Investment Partners senior portfolio manager Jun Bei Liu said Mirvac entering the running for Collimate was good news for AMP because it could push up the price. “Obviously, the more bidders the better because it means potentially higher prices. And very high-quality bidders as well.”
Liu said while both parties were high quality, she had a slight preference for Dexus. “It’s just a better-run business; they’re both run well but Dexus is No.1. Then there are synergies that can be realised.”
Tribeca has a small shareholding in AMP and Liu said investors had been kept well informed throughout the process.
An acquisition of the management rights by Dexus will bolster its funds under management from $27 billion to $57 billion, giving it the third largest platform behind market behemoths Charter Hall ($61 billion) and Goodman ($64 billion).
The fact that there are so many companies circling AMP reaffirms the view that there is fundamental value in the company.
A separate tussle is under way between Apollo Global Management and Digitalbridge over AMP’s offshore infrastructure equity business.
Offloading its signature funds management arm will leave AMP to focus on its core wealth management, financial advice and banking businesses following a series of missteps that cost it more than 92 per cent of its value over the past two decades.
Morningstar analyst Shaun Ler said any Dexus takeover of Collimate would come down to price. He has valued the business at about $1.4 billion, which includes valuations of around $300 million for its real assets and $1 billion for its infrastructure assets but said this was based on “rough estimates” because disclosure over the business is low.
Ler said the right price could be good news for shareholders because Dexus had a stronger management reputation than AMP which could stem outflows from the business.
“It all comes down to price. If the business is still run under AMP and the current management team, you get those comments about clients being dissatisfied. But Dexus has a very good reputation so if Dexus took over the platform, it could be more valuable.”
Ler said he did not have any oversight over the live bids, but the level of interest confirmed that AMP was under-valued. “The fact that there are so many companies circling AMP reaffirms the view that there is fundamental value in the company. I think it really highlights the point that the business has been underpriced.”
Article Source: www.brisbanetimes.com.au
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