Embattled wealth manager AMP faces shareholder pressure to resolve its protracted talks with US group Ares Management, with a key investor warning uncertainty over the deal risks harming the value of its crown jewel AMP Capital.
As uncertainty hangs over chief executive Francesco De Ferrari’s future, substantial shareholder Allan Gray said the long-running negotiations with Ares over a joint-venture were destabilising for both staff and clients of AMP Capital.
Meanwhile, the board is also discussing Mr De Ferrari’s future leadership, it emerged last week, after an Australian Financial Review report that he would resign.
Ares dumped a takeover bid for all of AMP in February, instead entering into exclusive talks over a non-binding offer to buy 60 per cent of AMP Capital last month. The exclusivity period ended on Sunday and there has been speculation it will be extended.
Simon Mawhinney, chief investment officer at major AMP shareholder Allan Gray, warned the negotiations were dragging on for too long, and there was “growing unease” among investors about the Ares process and its potential impact on the value of AMP Capital. He argued AMP could gain more control of the situation by spinning off AMP Capital — regarded as its most valuable division — to shareholders directly.
“If they [Ares] want to buy it or buy some of it, they could do it in the secondary market,” said Mr Mawhinney, whose fund owns about 6 per cent of AMP.
“I just think it’s incredibly important to give staff and clients of AMP Capital certainty with respect to AMP Capital’s future.”
The talks with Ares are believed to be linked with Mr De Ferrari’s future at AMP. The company on Friday responded to the reports that Mr De Ferrari would resign by saying he remained in the job. However, it left the door open to a change in CEO, saying the board and Mr De Ferrari were “constructively discussing the future strategy and leadership of the group.” AMP did not provide further comment on the weekend.
Under the planned deal with Ares, AMP aims to sell 60 per cent of AMP Capital’s private markets business for $1.35 billion to Ares, and retain a 40 per cent stake. AMP’s chair Debra Hazelton and Mr De Ferrari have argued the partnership would strengthen the business by tapping into Ares’ network and lowering the risk of its overseas expansion plans.