AMP is now understood to be out of the contest for Westpac’s wealth management unit, with the assumption being that the business must now surely be sold to Colonial First State.
Since final offers went in on August 22, it has been radio silence from Westpac.
There were some rumblings that AMP may have been re-approached by the bank after offers came in below expectation and was considering a last-minute bid.
But AMP sent a strong signal to its investors at results that there were no acquisitions on the agenda, with the proceeds it receives from asset sales to be returned to its shareholders, some of whom remain on the register solely for that reason.
Sources say that Colonial First State lobbed an offer that may have been as low as $600m - others say it was more like $400m and could be noncomplying.
Regardless of the number, the talk is that the offer was well below the price many had earlier thought that the business may attract from a buyer.
Adding to the dilemma for Westpac is that the business will be tricky and costly to separate, potentially setting the bank back by as much as $50m to $100m.
But at the same time, if it holds on to the business, it then has to spend money to get its functions up to scratch.
Earlier, it was anticipated that the unit would sell for at least $700m, but prices are understood to have again been adjusted downwards amid a period of market volatility.
Colonial First State is jointly owned by Kohlberg Kravis Roberts and CBA.
In the first round of the contest, CFS was thought to have been the only group to have put forward a conforming bid.
AMP reported results on August 11 and at the time it said that it was in for a $1bn-plus windfall after a series of asset sales, including its stake in Resolution Life Australasia and its fund manager Collimate Capital.
But without its funds management unit and its life insurance operation, the company only consists of a bank and a wealth management arm and market observers believe it needs to acquire a business to regain some meaningful scale.
AMP’s market value is $3.7bn and sources say the highly regarded chief, Ms George, would need more time to prove to investors that she was righting the ship before she would gain the support needed to embark on any transformational deals.
Some believe that even if Westpac attracts low offers for the business, it is still better off a seller given the capital investment that is needed over time.
Advising on the sale of Westpac’s wealth management unit, which includes its Panorama platform, is investment bank Morgan Stanley.
Already, Westpac has offloaded the superannuation operations in its wealth management unit to Mercer Australia for $225m.
Earlier, Westpac had about $140.2bn of funds on its platforms, including $105bn on its Panorama platform at March.
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