AMP raises 'white flag' and explores options to splinter group

Investors have welcomed the news of AMP exploring options to sell off parts of the business, as the embattled wealth manager embarks on a comprehensive review of its operations.

The company said on Wednesday it had appointed a team of consultants and lawyers to examine opportunities presented by a spike in interest from third parties keen to buy its assets.

AMP is exploring options to spin off parts of the company. Credit: Louie Douvis

"AMP periodically receives unsolicited interest in its assets and businesses, and recently has experienced an increase in interest and enquiries."

"The board has therefore decided to undertake a portfolio review to assess all opportunities in a considered and holistic manner, evaluating the relative merits as well as potential separation costs and dis-synergies, with a focus on maximising shareholder value," the company said in a statement.

AMP shares jumped almost five per cent on the news, closing the session at $1.62.

Tribecca Partners senior portfolio manager Jun Bei Liu said it was clear AMP had "raised the white flag" and the company's value needed a boost. "It's all too hard to keep the business as it is together," she said. "It's going to be a very challenging journey for the business but it's the right thing to do."

Newly appointed chair Debra Hazelton reiterated support for AMP's strategy, including the pivot to private markets in AMP Capital – the business that has been engulfed in scandal leading to the demotion of its chief executive Boe Pahari after investor outrage over the company's handling of a sexual harassment complaint against him.

"However, we have taken a decisive step to undertake a portfolio review to ensure we appropriately assess all options to maximise shareholder value in a considered and disciplined manner," Ms Hazelton said.

Merlon Capital principal Hamish Carlisle has called on the group to spin off and rebrand AMP Capital's private markets business, that oversees investments in property and infrastructure.

"Our strong view is they shouldn’t own that private markets business," he said. "The company has a disastrous track record in terms of capital allocation and as we’ve seen recently, in terms of their capacity to manage businesses. We think the sooner they spin off that business, the better."

Mr Carlisle added the reputational fallout following AMP's approach to handling the sexual harassment complaint against Mr Pahari had created material issues for that arm of the business.

"Up until recently, they've been able to distance AMP Capital from some of the other issues around the royal commission and restructure of the advice business.

"This has created a very clear and present danger in terms of client loss. This is a people business, so it is about attracting and retaining investment talent. And what we've seen recently is unhelpful."

According to Ms Bei Liu, AMP Capital was the most valuable arm of the group and might be the first to go. Other areas of AMP, including its superannuation business, continue to be plagued by legacy issues and liabilities which could push the asking price down.

"It's the end of an era but it's the right thing to do," Ms Bei Liu said.

Credit Suisse, Goldman Sachs and King & Wood Mallesons have been appointed as advisers to manage the review.

AMP reported double-digit falls in profit at its full-year results last month, with operating earnings falling across all four of the company's divisions – 43 per cent in AMP's domestic wealth management business, 40 per cent in AMP Capital, 30 per cent in AMP Bank and 18 per cent in its New Zealand wealth management arm.

The sale of AMP Life came as a shock to many investors, but chief executive Francesco De Ferrari has maintained the sale shored up the company's capital position and enabled it to return $544 million to shareholders.

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