AMP warns of Collimate sale delay, alternate plan

The wealth manager says Chinese regulatory delays may cut overall returns even as it fast-tracks an alternate plan.

AMP CEO Alexis George has said the sales would deliver certainty for both clients and AMP staff. Picture: Jane Dempster.

AMP is still battling to close out its Collimate Capital sale, with the wealth manager warning it has less than three weeks to get the deal over the line before $25m is sliced off the purchase price.

The protracted sale of the real estate and domestic infrastructure equity business to Dexus, announced in April, was due to complete before the end of 2022.

But it is still awaiting regulatory approval in China – necessary due to AMP’s stake in China Life AMP Asset Management.

With the final hurdle yet to be cleared, AMP and Dexus on Monday detailed the steps taken to protect the deal if Chinese regulators still haven’t given the green light by January 26.

These include extending the date for satisfaction or waiver of conditions precedent to 28 February, from January 27, and working toward an alternative transaction structure with a two-stage completion process to take account of the regulatory delays.

If all conditions necessary to complete the deal are not satisfied or waived by January 26, the purchase price will be slashed from $250m to $225m and the remaining potential earn out amount ($26m) will be forfeited. As the parties await Chinese regulatory approval, they have also started discussions on a potential workaround to get most of the entities and staff to Dexus by March.

“AMP and Dexus have entered into a non-binding term sheet which contemplates a revised transaction structure with a two-stage completion process,” AMP said in a statement.

“If binding agreements are entered into, the revised transaction structure would allow for most legal entities (holding the majority of the Collimate Capital domestic assets and management rights) as well as employees, to transfer to Dexus at first completion, prior to the satisfaction of the remaining condition precedent and by March 2023.”

The transfer of the last remaining entity, which currently holds the interest in CLAMP, would take place at final completion once regulatory approval was received, AMP said. The alternative transaction approach is being pursued alongside the existing initial transaction structure for “maximum flexibility”, it added.

The latest update comes weeks after AMP last flagged a hold up to its Collimate sales due to regulatory delays. At that time, in November, the parties – AMP, Dexus and DigitalBridge, which is buying Collimate Capital’s international infrastructure equity business – were awaiting the green light from both the US and China.

AMP on Monday confirmed that the regulatory approval for DigitalBridge transaction was in its final stages, with deal completion expected by February.

AMP in April moved to hive off its Collimate businesses in a bid to unlock value for shareholders and put its focus back on banking and wealth management. While Dexus agreed to buy the wealth manager’s real estate and domestic infrastructure equity business for $250m and an earn-out consideration of up to $300m, DigitalBridge scooped up the international infrastructure equity business for a total $699m.

Once the sales are complete, AMP is expected to deliver cash returns to shareholders while focusing on driving its core banking and retail wealth businesses in Australia and New Zealand.