Private equity giants eye AMP

AMP is in private equity’s sights. Picture: Hollie Adams

AMP is the latest company in the wealth management space to get attention from private equity.

Some say the listed financial could be on the shopping list of not only Kohlberg Kravis Roberts but its New York-based rival Blackstone as well.

Blackstone, which owns most of Australian wealth manager La Trobe Financial, was beaten by KKR in the final hour in the race to buy a stake in the Colonial First State wealth management business from CBA last month, as revealed by this column.

It is now known that Blackstone has recently been keeping a close eye on other potential acquisition opportunities in the Australian market.

Macquarie considered an acquisition of AMP with KKR and China Life in 2017, so the question is, if Blackstone wants to buy AMP, whether it teams with Macquarie or finds another bank to offer assistance.

That is if Macquarie itself still has an interest in AMP – a wealth manager and bank that now has a $6.36bn market value.

This week, AMP secured all the regulatory approvals needed for AMP to sell its life insurance business to Resolution Life for $2.5bn, placing a deal on track to be finalised next week, which could be the catalyst for some activity.

It prompted discussion about Macquarie and KKR returning to the target, with Bell Potter analysts saying the “worst was behind AMP” and that Macquarie would secure meaningful synergies from the overlap in banking, platform and funds management, with advice spun off into its own vehicle.

Bell Potter said KKR could be in the mix following the CFS purchase given obvious synergies, “or even another private equity firm looking to consolidate MLC or BT Financial Services”.

Market experts say that most major buyout funds would be running the numbers on all the big wealth managers in the space, including AMP, amid a life sales process for NAB’s MLC wealth management business which is up for sale through Macquarie Capital and Morgan Stanley.

The MLC business is thought to be worth up to $4bn.

A 55 per cent interest in Colonial First State was purchased for $1.7bn by KKR last month. It was considered more sought-after than MLC, which is estimated to be in need of about $300m of capital spending.

Westpac’s BT Financial Services is soon expected to be on offer, with investment bank Goldman Sachs advising.

Of all the wealth management companies that are under the watch of buyout funds, AMP is considered to be the hardest to acquire because it involves a very public on-market acquisition by a takeover or scheme of arrangement.