AMP says De Ferrari is still CEO, but review under way

Under-fire AMP flags a leadership and strategy review, but again declares CEO Francesco De Ferrari has not resigned.

AMP declares leadership review but says CEO Francesco De Ferrari has not resigned. Picture:John Feder/The Australian.

Under-fire AMP is not ruling out eventual leadership changes as it pushes ahead with hiving off a majority stake in its private markets unit, despite again declaring chief executive Francesco De Ferrari has not resigned from his post.

AMP’s shares were placed in another trading pause on Friday, as the company gave an additional update to that provided on Thursday in an attempt to calm investor nerves over a potential CEO departure.

Investors are also grappling with uncertainty over the sale of a controlling interest in AMP’s private markets division, as well as question marks over Mr De Ferrari’s tenure.

“AMP confirms there has been no change to the CEO’s position and that Mr De Ferrari has not resigned,” the wealth and asset management company said in an ASX statement.

“The board and Mr De Ferrari are working together and constructively discussing the future strategy and leadership of the group, post the completion of AMP’s portfolio review. These discussions are ongoing and AMP will provide updates as required.”

The statement signals that leadership changes may transpire if AMP secures a deal to sell a majority stake in its private markets unit to US firm Ares Management. Despite that and Thursday’s AMP update - which said in just one sentence that Mr De Ferrari had not resigned - questions remain as to how long his tenure will last.

Internally the rump of AMP that remains, if the Ares deal is successful alongside the potential sale or partnership of its equities and fixed income business, is being referred to as “Remain Co”, sources said.

They noted that AMP’s board had started deliberating about who would run the much smaller Remain Co - AMP’s bank, wealth arm and New Zealand unit- if a binding transaction with Ares was secured.

The AMP board also conducts succession planning several times a year as part of its responsibilities. Mr De Ferrari has been in the top job for a little over two years.

A media report on Thursday said Mr De Ferrari was resigning and AMP had lined up former Sunsuper boss Scott Hartley, who started in the role of head of the Australia unit in January, to take over in an acting capacity.

AMP’s shares rallied as high as $1.40 in Friday trading, before losing some ground to close 0.9 per cent higher at $1.345.

Allan Gray portfolio manager Simon Mawhinney, a large AMP shareholder, said whatever happened from here investors had made their wishes clear to the board on future of the marquee capital division.

“The board does not have a mandate to leave AMP Capital under the AMP umbrella,” he added.

“If that (deal with Ares) can’t be consummated soon on acceptable terms... the board needs to and must spin-off AMP Capital, and specifically the private markets part.”

On the speculation around Mr De Ferarri, Mr Mawhinney said: "Francesco has a personal decision to make and the board needs to make the right decision about leadership.

“No matter what happens going forward... there is going to be change in AMP Limited.”

Australian Eagle Asset Management portfolio manager Alan Kwan said he was “deeply interested” in what the board had to say on AMP’s ongoing leadership, and who would revive the ailing wealth management unit if Mr De Ferrari exited.

“It has always been the hardest part to fix,” he added.

Mr Kwan, whose firm also owns AMP shares, said if the Ares transaction fell over the board had to give consideration to a spin out of AMP’s private market division, which houses infrastructure and real estate investments and funds.

“They have to think about it, because you have to lock in your management. It might give them an opportunity to grow if it (private markets) is spun out.

“Domestic competitors are trying their hardest to pick the eyes out of the real estate business.”

AMP has endured a damaging period and executive instability due to conduct issues made public last year, and the fallout from the Hayne royal commission.

On deal negotiations, The Australian on Thursday revealed AMP and Ares were leaning toward an extension of a key exclusivity period as negotiations dragged on.

The parties ar close to sealing a short extension of the exclusive negotiating period to form a joint ownership structure for AMP’s private markets business.

An announcement on whether the parties would secure a binding transaction is expected on or before March 29, which is the first business day after the end of a 30-day exclusivity period.

The indicative transaction terms for the Ares deal were outlined by AMP late last month, and would see the US firm acquire 60 per cent of the $2.25bn joint venture and take management control. AMP would own the remaining stake.

But the real estate arm is causing complications in the Ares negotiations. Two of AMP’s real estate funds are assessing whether to shift to external managers, rather than leaving the mandate with the parent entity.

Ares has already abandoned a $6bn whole of company offer to acquire AMP.

The confusion about Mr De Ferrari’s AMP tenure prompted him to send an employees email to explain his position.

“I want to assure all of you that I have not resigned and I remain very much in the role and very focused, with the support of all of you, on the significant amount of deliverables we have ahead,” he said.

“Please don’t get distracted by this type of speculation, and keep up the great work you are doing.”

Sources said on Thursday prior to the media report flagging Mr De Ferrari’s resignation, it had been “business as usual” for the AMP CEO with meetings and conference calls.

But the Ares transaction - if sealed - would leave AMP with a markedly reduced business footprint, that Mr De Ferrari may not want to lead given its shrinking size. AMP is also assessing a sale or partnership for its public markets unit within the capital division.

The group sold its life insurance unit to Resolution Life in a transaction completed last year.