AMP’s board faces crunch time over the next 10 weeks as it figures out how to move forward with a sale of all or part of the company, or abandon the auction altogether.
At the tail end of another tumultuous year for the 171-year-old wealth and asset management group, tensions are rising between AMP chief Francesco De Ferrari and the board over the best way forward as the clock continues to tick.
Large private equity firms are running the numbers to see if they can orchestrate a break-up and hive the bank off to someone else. Some are also seeking out potential partners to take the financial planners.
Getting a handle on future customer compensation and the class actions facing AMP need to be factored in, along with the target providing indemnities.
And property groups are busily circling the real estate platform.
AMP’s board led by Debra Hazelton — and flanked by Goldman Sachs and Credit Suisse — certainly has its work cut out. With investors still reeling from the events that led to the exit of AMP Australia boss Alex Wade and the demotion of AMP Capital chief Boe Pahari, the strategic review cannot be allowed to drag on, either.
AMP’s real estate platform is already generating a lot of interest with the likes of Lendlease, Charter Hall and Dexus Property Group in and around the sales process.
Dexus earlier put forward an offer to merge the Dexus Wholesale Property Fund with the AMP Capital Diversified Property Fund.
Another name that has decided to so far watch the real estate platform sale from afar is Oxford Properties Group, which bought the Investa Office Fund two years ago. Oxford was set up in 1960 and manages about $C60bn ($60.3bn) worth of assets around the world on behalf of its co-owners and investment partners. It sits within the stable of one of Canada’s largest pension plans, OMERS.
AMP manages an attractive portfolio of assets. Among its portfolio are Sydney’s Quay Quarter office and retail complex at Circular Quay.
Investors are mindful that while there are retention arrangements in place in AMP’s real estate arm, the risk of proposed management buyouts in other parts of AMP Capital can’t be ruled out.
Other infrastructure managers may also attempt to pick off teams and destabilise the division.
While this is all occurring, AMP is also working on what to do with its global equities and fixed-income business, including exploring partnerships with much larger managers. It is also looking at how to better align the multi-asset group to the AMP Australia business.
The possibilities the board and its advisers need to consider with the aim of maximising shareholder value are many, and several shareholders have already pushed for a spin-off of AMP Capital.
The situation is further complicated by COVID-19 and a spike in expected loan losses across the banks, including that which sits within AMP. Given many large and regional players are trading lower than book value, working out how to fund a cash bid for AMP bank is not an easy feat.
The AMP board deliberations are about to get even more intense.
BoQ search
Bank of Queensland has tapped headhunters from Egon Zehnder to help find a new group executive for its retail division, given the upcoming retirement of Lyn McGrath from the role.
McGrath joined BoQ from Commonwealth Bank in August 2018 and will retire from her role in the new year. She is said to want to transition to more board roles, adding to her non-executive directorship at the Australian Digital Health Agency, which is chaired by Elizabeth Deveny.
BoQ reports its full-year results next week after last month topping up its expected loan impairment expenses to $175m before tax for the 2020 year, based on its latest modelling.
The bulk of the bad debt provisions — $133m — related to COVID-19. That figure is nearly double the $71m it was provisioning for only two months ago.
Goldman Sachs expects annual cash earnings to tumble 34 per cent and the analysts are pencilling in a deferred first-half dividend payment of 10c a share alongside a final dividend of 2c.
Broker tussle
ANZ has got several dozen smaller mortgage broker groups offside as it forces them to link up to the bank’s systems through bigger aggregator firms such as AFG, FAST and Finsure. ANZ’s move is setting the bank up for a showdown with some groups that believe they are being pressured to go via larger firms, some due to not writing enough business through ANZ.
The bank is arguing it makes sense for smaller players to connect via large groups due to the complexity and additional compliance required from having a sprawling network. But given the longstanding nature of the arrangements, the argument is not sitting well with the brokers.
ANZ is working through the transition on a case-by-case basis and there is no deadline for the change to take place.
The bank’s push has smaller broking groups fearful that the other majors will follow suit, too.
After a flurry of demand for the $4000 cashback for those refinancing mortgages to ANZ earlier in the year and other price-led offers, the bank also grappled with a blowout in loan processing times. Industry sources told this column it was not uncommon for mortgages submitted through ANZ to confront processing times of three to four months.
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