AMP’s plans for AMP Capital, NZ wealth unit deals on hold

AMP has reported a decline in its wealth management earnings by close to 50 per cent Picture: Hollie Adams

The $4.5bn financial services provider AMP is understood to have suspended all corporate activity, including plans to sell down an interest in AMP Capital and offload its New Zealand wealth operations.

Shares are down from about $2 last month to about $1.445, as the panic selling across the market creates more pain for the wealth manager that has already faced a harrowing two years on the back of a fees-for-no-service scandal that emerged from the royal commission.

With its adviser UBS, AMP was understood to have been weighing options for its highly valuable AMP Capital, which has $200bn worth of assets under management, since November.

The understanding is that the financial group had been considering a plan to bring in a capital partner to jointly own the operation. The logical party was always seen to be Japan’s Mitsubishi UFJ Trust, with it already owning 15 per cent, and it has first right of refusal to buy it.

Mitsubishi UFJ also bought Colonial First State Global Asset Management in 2018 for $4.13bn.

However, those plans are said to be on hold.

It is believed parties have approached AMP to buy AMP Capital but have been rebuffed, with Macquarie seen as likely to be among them.

Resolution Life agreed last year to buy AMP Life for $3bn, but the deal is yet to be completed and it is subject to regulatory approvals in Australia and New Zealand, despite gaining Chinese approval.

If put up for sale, AMP Capital was earlier thought to be worth $2.5bn-$3bn.

The wealth unit in New Zealand was expected to be worth between $300m and $500m and had been up for sale through Credit Suisse and Jarden.

One of the parties said to be looking was TA Associates.

Already, parent company AMP has reported a decline in its wealth management earnings by close to 50 per cent after large fund outflows of $6.3bn.

It posted a $2.5bn loss, largely due to a $2.35bn impairment taken in the first half, and it has $2.14bn of corporate debt and a $250m undrawn loan facility.

Meanwhile, other banks looking to sell assets are expected to suspend their plans.

ANZ has had UDC Finance on the market through Deutsche Bank and Morgan Stanley. Two weeks ago, buyout funds TPG Capital and Apollo had been working on a deal to acquire the equipment finance provider.

However, in the current market, the thinking is that the deal will be impossible to price.

Other banks that may put deal activity on ice include CBA with its wealth management arm that it planned to divest, NAB with its MLC business and Westpac with businesses such as equipment loans, wealth management and life insurance all earlier earmarked for divestment.