Ares considers AMP Capital before wealth and banking arms

US-based Ares Management is believed to be passing up the opportunity to buy AMP’s bank and wealth management arm. Picture: NCA NewsWire / Steven Saphore

AMP is likely to receive a formal bid for only part of the business from US-based Ares Management in the weeks ahead, with the group believed to be passing up the opportunity to buy the Australian-listed financial group’s bank and wealth management arm.

It comes after Ares, which counts former Credit Suisse Australia boss John Knox as its Australian and NZ chairman, put forward an informal bid at $1.85 per share, valuing the company at $6.4bn in a cash-and-scrip proposal last year.

The group has been carrying out due diligence with assistance from Morgan Stanley.

However, market hopes have been fading that an offer for the whole company will emerge.

Ares was keen to buy AMP Capital and the plan was to find buyers for other parts of the business. The understanding is that there are a limited number of parties that are keen buyers of the bank or wealth management arm at a strong price.

Another view is that AMP would be keen to sell the bank itself, rather than Ares.

Regional banks such as Bank of Queensland, Suncorp and Bendigo would only be interested in buying the bank at a discount, according to sources, as is the case with Macquarie.

Macquarie previously looked at a break-up of AMP but later walked away.

DataRoom understands ANZ had also made an approach for AMP Bank, but it is not known at what price. The bank’s net asset value is thought to be about $2bn.

ANZ has also recently been running the ruler over ME Bank, which is up for sale through Macquarie Capital and may fetch up to $1bn.

The ME process is said to be advanced, and ANZ is thought to have been an interested buyer in the early stages of the process, but it is unclear whether it remains a contender.

Some believe ANZ may follow NAB’s lead and buy a neobank, with NAB announcing it had purchased neobank 86 400. The logic for such a move is to secure a neobank’s technology, which can be costly for traditional banking institutions.

Sources said one of the top four banks did due diligence on neobank Volt last year.

As reported earlier by DataRoom, lenders out of Japan and Singapore have recently been looking at buying regional banks in Australia.

A break-up of AMP is considered difficult because of the reliance of the bank on other AMP divisions for its deposits, while AMP Capital relies on the wealth management arm for investment capital.

AMP is subject to a strategic review with help from Goldman Sachs, Credit Suisse and Blackpeak Capital. Its shares last closed at $1.58.

As of a year ago, AMP Capital had $203bn worth of assets under management. It is mulling asset sales following a decline in performance following the Hayne royal commission findings.

In July, AMP Capital’s head of real estate, Carmel Hourigan, left to head office investments at Charter Hall.