Investors sceptical of AMP as $6bn-plus bid from Ares drags on

AMP will likely provide a vanilla bid update at its earnings results next week. Picture: Hollie Adams/The Australian

It’s highly improbable a binding $6bn-plus offer for beleaguered AMP will lob next week, when the 172-year-old wealth group delivers its annual results.

This column understands while US buyer Ares Management continues to work on firming up its indicative offer, next week is no longer being targeted as a key date, given all the moving pieces in AMP’s business.

The protracted nature of the due diligence process doesn’t bode well for the whole-of-company binding bid getting off the ground. Then, of course, Ares needs traction with the board and key AMP shareholders.

AMP — and its investment banks Goldman Sachs and Credit Suisse — are also continuing bilateral talks with potential buyers for parts of the company, including its banking operations.

The Australian revealed Macquarie Group’s banking and financial services unit had renewed interest in buying AMP’s banking arm, with Bank of Queensland and Bendigo and Adelaide Bank also in talks.

Ares, led by John Knox locally, is said to be keen for other parties to take ownership of AMP’s bank, and its wealth operations including the financial advisers and investment platform. Contingent liabilities and legal action stemming from AMP’s wealth arm are a sore point for any potential buyer.

That’s even if the seller provides indemnities and warranties to cover future customer compensation AMP may need to pay, or regulatory and legal costs.

A non-binding offer by Ares, pitched in October at $1.85 a share in cash and stock, resulted in the AMP board opening the door to a broad auction process. AMP’s shares were on Thursday floundering at $1.53, suggesting investors are sceptical on whether a compelling bid will emerge.

AMP’s executive team led by Francesco De Ferrari have had to continue to execute his three-year turnaround program and prepare full-year results, while also dealing with a long list of due diligence requests. Staff departures in AMP Capital — the infrastructure, real estate and equities division — haven’t helped the situation.

AMP reports annual earnings on February 11, and shareholders will want some sort of update on the Ares situation, and the company’s own strategic review which may prompt a break-up.

It’s a delicate situation for the board as it ponders what 2021 looks like for the company. Last year was horrendous for AMP when it was entangled in two scandals involving executive behaviour.

One was linked to the promotion of Boe Pahari to lead AMP Capital, despite him being penalised for an earlier sexual harassment incident. Investor fury over that, and the exit of AMP Australia boss Alex Wade for inappropriate conduct, eventually led to David Murray vacating the chairman’s seat and Pahari being demoted.

NAB fortifies division

National Australia Bank has completed a hiring drive to bring on 50 new private bankers and advisers, with the lion’s share joining from Westpac and CBA.

The initiative was announced in July and comes as CBA shouts its ambitions to take on NAB’s dominance in business banking from the rooftops.

The NAB business and private banking division is now under the stewardship of new business banking boss Andrew Irvine who is formulating his broader strategy. That will tie in with NAB Private and JBWere boss Justin Greiner’s plans to build out and grow the bank’s services and presence among high net worth clients.

Irvine’s focus is skewed to ensuring NAB makes better use of data and analytics in the business bank and also makes data services more available to customers. That would mean business customers would get real-time access to analytics and data, freeing up bankers.

NAB signed up to and took an equity stake in London-based SME services and analytics business Pollinate last year, joining NatWest, MasterCard, EFM Asset Management and Motive Partners as an investor in the fintech.

The task at hand for Irvine is a big one as the COVID-19 recovery takes hold and NAB works to defend and grow its stranglehold in business banking, while under attack from CBA.

Barrenjoey the raider

New Magellan Financial-backed investment bank Barrenjoey has again raided JPMorgan’s local ranks in the past two weeks, but this year’s poaching season is far from over.

More junior staff at JPMorgan are in the crosshairs of hiring efforts and this column understands the new investment house is also biding time to potentially scoop up dozens of UBS research and advisory employees. That activity is slated for after UBS pays bonuses into staff accounts — towards the end of this month.

Barrenjoey counts several UBS alumni among its key people, and has already lured some senior staff from the Swiss bank.

UBS, which has been expecting more targeting of its staff, put retention strategies in place last year. The next few months won’t be boring that’s for sure, as the merry-go-round continues.

Investment banking bosses are taking Barrenjoey’s efforts seriously given the big names involved in the firm, including David Gonski, who has been lined up as independent chairman.

Former UBS banker Guy Fowler is executive chairman and former Challenger boss Brian Benari is chief executive. Former UBS Australia boss Matthew Grounds is preparing to join this year. A merger between Aussie Home Loans and online mortgage broker Lendi marked Barrenjoey’s first formal mandate in 2020. It worked with Ashurst to advise Lendi, while CBA took counsel from UBS.