AMP sells $7bn debt platform to Ares Management

AMP’s shares rally after striking a $428m deal to offload its infrastructure debt business to Ares Management.

AMP shares rally on the divestment news. Photo: Hollie Adams/The Australian

AMP shares rallied after the wealth management arm cinched a deal to offload its $7bn infrastructure debt platform to New York-listed Ares Management for $428m in cash.

AMP, which is in the midst of a demerger with the wealth arm now known as PrivateMarketsCo, is using the cash to bolster the balance sheet. The shares were up 6.9 per cent by midday.

PrivateMarketsCo. chief executive Shawn Johnson said the business going forward will focus on the $44bn of existing equity investments in real estate and infrastructure.

“PrivateMarketsCo and AMP will realise significant value from the divestment as well as retaining our valuable sponsor investments and carried interest in the closed Infrastructure Debt funds,” the CEO said in a statement.

“This will provide a strong revenue stream in coming years as we de-merge and accelerate the momentum in our business.”

The transaction, which is expected to complete in the first quarter, values the infrastructure platform at about $578m, which includes the $428m in cash and about $150m in sponsor investments.

Upon completion the entire infrastructure debt istrategy, including $7bn of invested assets and the investment team, will transfer to Ares.