Private equiteer JC Flowers kicking the tyres at AMP

JC Flowers is run by the former Westpac boss David Morgan and was founded in 2001 by billionaire and former Goldman Sachs partner J.Christopher Flowers.

US-based private equity firm JC Flowers is understood to be circling the wealth operations of AMP.

It comes after the New York private equity firm made attempts earlier to buy the MLC wealth management business from the National Australia Bank before the business was sold to IOOF last month for $1.4bn.

For MLC, JC Flowers was advised by JPMorgan, but it is understood the American bank is not aiding its latest efforts to assess the AMP operations.

JC Flowers is run by the former Westpac boss David Morgan and was founded in 2001 by billionaire and former Goldman Sachs partner J.Christopher Flowers.

As of 2017, the business had invested more than $US15bn ($20.5bn) in capital.

It has bid for a number of high profile portfolios in the past, including Sallie Mae, offering about $US25bn amid the global financial crisis in 2007, troubled British lender Northern Rock, Friends Provident and Bear Stearns.

While it has considered various targets in Australia, it is yet to make a major acquisition.

Its interest in AMP’s wealth operations follows an announcement by the company that it is reviewing assets and businesses to “assess all options” for its strategy, including potential asset sales.

AMP hired Goldman Sachs along with Credit Suisse to carry out the work.

This is after a years of underperformance at the iconic Australian group, a fees-for-no-service scandal during the royal commission into banking and criticism over its handling of a number of corporate governance matters, including the controversial decision to appoint Boe Pahari as head of AMP Capital despite a $500,000 fine for sexual harassment.

Chairman David Murray and board member John Fraser have since resigned.

Macquarie Capital and Kohlberg Kravis Roberts had been looking at an acquisition of AMP on and off for some time. It is thought KKR was examining AMP around November last year.

However, both have walked away from the target for now, say sources, with KKR focused on completing its purchase of Colonial First State from CBA and Macquarie deciding that the business was non core.

Property groups are also circling the real estate assets within AMP Capital funds, with Dexus putting forward a proposal to merge the AMP Capital Diversified Property Fund with its own funds management arm.

The wealth management arm is closely tied to AMP’s bank, which secures most of its deposits from the wealth arm and some question how easy it would be to separate the businesses.

A foreign private equity group is not able to own much more than 10 per cent of an Australian bank which rules JC Flowers out as a buyer.

One option being discussed is spinning off the bank to the shareholders, although some say he bank, which does not have a large pool of customers or any branches, does not carry enough capital for this to be effective.

Another recent blow to AMP was losing its “A” S&P credit rating in recent days, with it downgraded to BBB+, which will increase its debt costs.