Private equity giants are engaging in detailed streams of work to gauge whether to get actively involved in a tilt for some or all of $4.7bn beaten-up wealth manager AMP.
One of those is heavyweight KKR & Co which is understood to have a team looking at whether it can make various AMP scenarios stack up.
KKR and other private equity firms are keeping close tabs on AMP’s share price, which on Thursday sank 5.6 per cent to $1.36, as investors digested a quarterly update on fund flows.
This column understands KKR’s work on a possible whole-of-company AMP deal, which has not included a formal approach to AMP’s board, has seen it bring in consultants to help dissect the detail and dynamics of the target’s wealth and advice business.
That has included understanding how the business would fit with KKR’s 55 per cent stake in Commonwealth Bank’s Colonial once that deal is complete.
Also assisting on the operational front and looking at how Colonial could be integrated is new KKR recruit Nicholas Hyde, who joined mid-year to lead the Australia and New Zealand client partner group.
Hyde joined from IFM Investors where he was a director responsible for leading new business development to institutional accounts. Prior to that, he had a stint at investment adviser group Wellington Management.
On Thursday’s update, KKR would have been heartened that AMP’s North platform attracted $818m in net cash inflows in the third quarter, although outflows persisted in other parts of the business due to lost customers and the superannuation early access scheme. AMP Capital suffered net outflows and the group’s wealth management business was hit by further $1.95bn in net outflows in the September quarter. The outflows in wealth do, however, seem to be slowing.
KKR and other potential AMP suitors are also keen to see how Westpac proceeds with a sale of its investment platform business in coming months, as the big banks continue their retreat from the sector.
The AMP board — led by Debra Hazelton — is aiming to give investors an update on its strategic review before year’s end.
A decision on whether to proceed with a sale of the real estate platform may occur sooner, given strong buyer interest.
On Thursday, AMP chief executive Francesco De Ferrari was keen to stress to investors the strategic review — and potential sale of AMP or parts of the business — was happening concurrently with his turnaround plan.
“As we move into the second year of our three-year strategy, we are accelerating our business transformation, and continuing to mitigate our legacy issues, including our client remediation program which remains on track to complete in 2021,” he said. Our portfolio review, announced in this quarter, is progressing in parallel and being managed without delay to our transformation.”
The AMP board has formed a portfolio review committee which is meeting about once a week to discuss developments in the process.
The AMP process will also need to take into account the various strategic stakes held by the group and the capital division, and what happens to those holdings in the event of a bigger deal emerging.
AMP has two joint ventures in China, with the group entity owning 19.99 per cent of China Life Pension Company and the AMP Capital unit owning 15 per cent of China Life AMP Asset Management (CLAMP).
As at June 30, the CLAMP venture managed $57.6bn of total assets under management on behalf of Chinese retail and institutional investors. That was up 18 per cent from December 31.
The push into China was heralded as a big move by AMP in 2015, when it was the first foreign company to invest in a Chinese pension company.
The other strategic holdings at AMP are the capital division’s 24.9 per cent stake in US-based real estate investment manager PCCP, acquired in 2017. And finally, the 20 per cent in Resolution Life’s local entity which was negotiated by AMP as part of the re-cut sale of its life insurance business.
QBE’s gaps
QBE Insurance is moving ahead with an executive search for a new chief executive and has also turned to headhunters at Johnson Partners to help fill the role of Australia boss.
Search firm Russell Reynolds Associates is set to conduct the QBE CEO search after the abrupt exit of Pat Regan last month.
Johnson Partners — which has also worked for QBE in the past — has been busy helping to fill executive vacancies at Westpac over the past six months.
The firm’s website says it was involved in securing Deem executive Chris de Bruin to lead Westpac’s consumer division and Bank of Montreal’s Scott Collary as Westpac’s chief operating officer.
QBE executive chairman Mike Wilkins — also the chair of Medibank from this month — certainly has his hands full.
The head of Australia QBE role was vacated by Vivek Bhatia who was appointed as incoming Link CEO ahead of a private equity offer being lobbed for the ASX-listed company.
On the QBE CEO search, Wilkins has privately told investors he will expedite the process to limit any impact on the company’s business momentum.
Former CEO Pat Regan left suddenly last month after the QBE board investigated a complaint by a US-based female employee.
A review by MinterEllison on behalf of the board found material that fell short of the insurer’s code of conduct and ethics.
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