AMP steps up sale process for NZ wealth division

Deal makers in the financial services space are expected to shift their attention from assets up for grabs at Westpac Banking Corporation to AMP, which is understood to be ramping up a sales process this month for its New Zealand wealth division.

AMP’s NZ wealth business is estimated to be worth between $300m and $500m. The sales process was earlier expected to start next year. Now advisers Credit Suisse and Jarden are preparing paperwork to land on the desks of prospective suitors in the coming days, sources say.

Parties identified as interested in the business include the locally based Partners Group, which is backed by New York-based buyout fund Blackstone, and private equity firm Bain Capital.

Credit Suisse was drafted in as adviser for AMP, which is also working with UBS, following the appointment of Francesco De Ferrari as chief executive in December. Mr De Ferrari is a former Credit Suisse banker.

The expectation was a float or a demerger of the New Zealand unit, but now the scales could be weighing more towards a sale.

The NZ wealth management unit delivered a 21.4 per cent fall in its net profit to $22mn for the six months to June 30 out of its $288m worth of interim operating earnings.

Meanwhile, those hoping to snap up Westpac’s equipment finance business could be in for disappointment. Apparently, Westpac has now opted not to sell the division, which had $600m worth of equipment loans. It bought the loan book from former HBOS subsidiary Bankwest at the same time that it acquired its car finance and auto loans business.

The reason for the bank to offload the assets could be that the loan book is too small and capital-intensive for Westpac and could not be supported in terms of the bank’s IT systems.

But it is understood that the loan book has been performing well and there has been no pressing need to sell it.

There are also suggestions in the market that it may also be hitting the pause button on the sale of its Westpac Life business through investment bank JPMorgan, although The Australian recently reported that the company had opened a data room for potential suitors.

The party that is most expected to buy the $1.5bn life insurance arm is AIG, but now some understand that its interest may have cooled following the appointment of a new head of mergers and acquisitions at the US business.

It is not the first time Westpac has opted to shelve plans for asset sales. The bank appointed Morgan Stanley to offload its auto loans division more than a year ago but did not move forward with a divestment.