AMP executive at centre of sexual harassment controversy quits as embattled group gives up on Ares deal

The executive whose sexual harassment scandal caused a huge headache for AMP has quit, while a major deal has been abandoned.

The AMP executive whose promotion despite previous sexual harassment allegations caused a massive headache for the financial services group is leaving as it abandons a deal with a US private equity giant.

Boe Pahari was anointed AMP Capital’s chief executive mid last year but was swiftly returned to his former role of global head of infrastructure equity and north west region after reports emerged of the claim by a female subordinate, reportedly settled in 2018.

Mr Pahari’s complete exit from AMP was announced on Friday along with a plan to demerge AMP Capital’s private markets business, which the group had sought to sell to Ares Management Corporation.

Ares had pitched a $6bn complete takeover of AMP in October but that collapsed, then a proposal in February to sell 60 per cent of the private markets business to Ares failed to eventuate.

AMP said on Friday it had decided to “conclude discussions” with Ares.

Boe Pahari has quit after months of hitting headlines. Picture: Britta Campion/The Australian

“The demerger would create two more focused businesses better equipped to pursue and allocate capital to distinct growth opportunities, and realise efficiencies,” the company said.

Under the new plan, AMP Ltd would keep a minority stake in Private Markets of up to 20 per cent, with the spin-off slated for completion in the first half of the 2022 financial year.

The plan is to list Private Markets, comprising infrastructure equity, infrastructure debt and real estate, on the Australia Securities Exchange.

“Existing AMP shareholders would receive shares in Private Markets proportional to their existing shareholdings in AMP Limited after taking into account any shares to be retained by AMP.”

UBS analysts said the demerger was a “less than ideal outcome” of the portfolio review.

“In our view, announcing a portfolio review was a risky strategy by the AMP board,” they said.

“Nine months later, it would appear that external parties have struggled to see enough value in the AMP business to warrant taking it on.

“AMP shareholders will now have to fund separation costs, the removal of stranded costs, the pay down of debt and likely another major cost-out program.”

The major announcement, which concludes AMP’s portfolio review, comes just three weeks after it confirmed speculation chief executive Francesco De Ferrari would retire from the helm of the 172-year-old once-mighty group, with ANZ deputy chief executive Alexis George to become his successor some time during the third quarter of this year.

Francesco De Ferrari oversaw a fraught period for AMP. Picture: Britta Campion/The Australian

Mr De Ferrari was brought in to overhaul AMP after the banking royal commission, which found damning evidence AMP advisers were charging fees for no service and in some instances kept slugging people who had died.

After Mr Pahari’s controversy emerged, Mr De Ferrari was forced to apologise to the woman who made the sexual harassment claim, telling a parliamentary inquiry “we … really deeply regretted the incident” but insisting the cultural problems at AMP were “present in a lot of large corporates”.

Also on Friday, AMP released its first quarter cashflows and assets under management numbers, which Citi Research said were overall “a little weaker than expected”.

“While new CEO Alexis George appears to be well respected, we note her recent experience seems more skewed to winding down wealth management businesses rather than revamping advice offerings,” Citi said.

“We wonder whether this will herald a change in AMP’s strategy.”

The value of AMP’s shares has plunged in recent years.

Its highest peak over the past decade was around $6.70 back in 2015. but the stock was priced at just $1.15 in intraday trade on Friday, up 2.2 per cent.