Dexus in talks over AMP co-investment stakes

The financial services giant’s co-investment stakes associated with the fund vehicles could amount to hundreds of millions of dollars, players familiar with their value said.

Sources said AMP and Dexus were working towards sealing an agreement on the co-investments with the commitments to be structured over time. Picture: Hollie Adams

AMP’s dramatic exit from its local property and infrastructure holdings may receive a boost if it disposes of co-investment stakes in assets alongside the management platform.

As revealed by The Australian, AMP is set to sell the management of its Australian property and infrastructure business to local player Dexus, while two US-based firms are battling to acquire the global infrastructure unit.

AMP is poised to announce the sale of the local real estate and infrastructure unit to Dexus this week, with the management rights of the local property and infrastructure assets expected to be worth between $200-$300m.

READ MORE: Dexus swoops on AMP property unit as demerger plan for Collimate Capital dumped | AMP demerger on the brink, sell off on the cards

In addition to that, AMP’s co-investment stakes associated with the fund vehicles could amount to hundreds of millions of dollars, players familiar with their value said.

If a deal on the co-investment stakes proceeds Dexus could commit to acquiring AMP’s interests in the investment vehicles and assets, which include some of the country’s best office towers and shopping centres, as well as stakes in airports and student accommodation on the infrastructure side. That would see the property heavyweight forging into real assets.

Sources said AMP and Dexus were working towards sealing an agreement on the co-investments with the commitments to be structured over time. Dexus could invest in several funds but would be unlikely to invest in all of AMP’s vehicles.

It would take the stakes if it was approved as manager of funds by the underlying wholesale investors in the funds, with that process to come.

That would ensure the buyer had bedded down the acquisition of the platform and won the support of investors for it to be locked in as the long-term manager of the vehicles.

An AMP spokesman declined to comment on Monday, as did a Dexus representative.

For the wealth manager, now led by former ANZ bank executive Alexis George, offloading the co-investment stakes makes some sense as AMP could secure capital out of hard assets to pour into its financial advice and banking and wealth operations.

AMP in November kept hold of its flagship wholesale office fund by committing to back the real estate platform and at the time announced total capital support for the property business ahead of a now derailed demerger of up to $500m.

Dexus may face some challenges from property players for the office fund and infrastructure investors will also need to be comfortable to ensure there is continuity across the platform, with key management locked in.

Dexus has received a healthy reception among big superannuation funds since its name emerged as the prime candidate to acquire the prized Collimate Capital platform in Australia. AMP rebranded its private markets business Collimate Capital earlier this year as part of a plan to spin-off the unit on the ASX.

That plan looks set to be dumped in favour of a break-up and sale of pieces of the real estate and infrastructure division which manages about $44bn.

The bidding for AMP’s international infrastructure business is down to two parties with Apollo Global Management and DigitalBridge vying for the division.

AMP’s Global Infrastructure Fund II closed with $US3.4bn in commitments in late 2019.

Separately, Dexus has deep ties with local superannuation funds and infrastructure investors have been supportive as they are seeking a top class home for the funds which have performed strongly despite AMP’s corporate turmoil.

The structured and phased nature of any transaction on the co-investment side means Dexus would not be hit with a large initial outlay, avoiding the need for equity raising. Any investments in property and real assets would fit alongside its existing holdings.

The A-REIT is relatively cashed up after last year putting more than $1.5bn worth of office towers on the market, and it is also using club structures for large transactions including its purchase of Perth’s Jandakot airport and on the development of Sydney’s Atlassian tower.