AMP’s asset sales could yield $1bn of capital returns to investors, say analysts.
In an Ord Minnett research note, analysts said that the returns – through share buybacks after the group has paid down debt – should serve as a positive catalyst for the financial services business.
They estimate that the group would use about $400m of the $1.8bn it has from asset sales to pay down debt, freeing up the financial firm to use the bulk of the funds for capital returns.
AMP sold its funds management arm this year after it changed the name of the business from AMP Capital to Collimate Capital.
DigitalBridge bought the infrastructure arm for up to $699m and Collimate’s property funds management business and domestic infrastructure equity business was sold to Dexus Property for up to $325m.
About four years ago, AMP offloaded its life insurance business for about $3bn to Resolution Life.
There has been speculation that AMP has recently been a suitor for Westpac’s $1bn-odd wealth management unit, but sources say it is now out of the contest.
Ord Minnett estimates that AMP will have a net tangible asset value of $1.35 per share after the recent asset sales.
AMP reports its half-year results on Thursday.
Analysts expect that weakness in wealth management will be offset by improving profitability in advice.
The analysts also assume ongoing pressure on the AMP bank when it comes to volumes.
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