The world’s largest investment manager, BlackRock, is understood to be talking to AMP about an acquisition of its global equity and fixed income business.
Earlier, Australian listed investment management group Challenger was said to be running the ruler over the operations.
However, DataRoom understands that Challenger was unable to meet AMP’s price expectations for the operation within the AMP Capital division.
Market experts also say that another deterrent for Challenger is that it does not have its own equities team, but rather a series of boutique fund managers.
BlackRock is considered a highly credible investment manager and would be an eager buyer as it searches for more opportunities to add scale to its business.
The question, though, is whether BlackRock may also be hesitant about meeting AMP’s price expectations, which some predict may be up to $500m.
AMP is looking for a partner or buyer of the management of $57bn of assets that includes not only fixed income and global equities operations, but Australian equities and listed infrastructure and listed global real estate investments.
The operation is not said to be highly profitable, which may create opportunities for a suitor.
Other potential buyers would also be no doubt taking a look such as Australian listed funds management business Perpetual.
A challenge for any buyer navigating the acquisition of a funds management business is that investors can walk away once a party has paid for it.
It is a situation that appears to be playing out with AMP’s other operations within its AMP Capital division.
US-based Ares Management has agreed to buy a 60 per cent stake in AMP Capital’s private markets business, which has $26.6bn of real estate under management, $19.5bn in infrastructure and $6.8bn of infrastructure debt.
The deal values the unit at $2.25bn.
However, real estate investors in the $7bn AMP Wholesale Office Fund and $5bn AMP Capital Diversified Property Fund are keen to find a new party to manage their investments due to concerns that Ares and the current AMP Capital management team may not have their preferred expertise when it comes to overseeing their assets.
It was a similar situation when Westpac sold its infrastructure manager Hastings Funds Management in 2017, where fund investors called extraordinary general meetings to remove Hastings as their manager.
Morrison & Co took over one of Hastings’ funds – UTA – while Macquarie now manages another – TIF.
Based on this, BlackRock would be sounding out investors before making any acquisition undertaking with AMP and may be keen to buy the public markets arm at a discount to factor in the risk.
AMP’s Global Equity and Fixed Income operations are responsible for the investment management of various strategies in listed Australian Equities, Fixed Income, Global Property and Global Infrastructure.
The Multi-Asset, Diversified and Multi-Manager funds would be retained by AMP.
Chaired by co-founder Larry Fink, BlackRock has $US8.676 trillion assets under management and is based in New York.
It has 70 offices in 30 countries and clients in 100 countries.
Along with Vanguard and State Street, BlackRock is considered one of the three Big Three index fund and passive management firms that dominate corporate America.
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