Fund instability delays AMP deal

AMP wants concurrent transactions to sell its local and global private markets units, but its efforts are being hamstrung by a large mandate loss and complexities in the deals.

AMP chairman Debra Hazelton and the board are hoping to press the button on two deals this week. Picture: John Feder

AMP is pushing toward concurrent transactions to sell its local and global private markets units this week, but the wealth and asset manager’s efforts are being hamstrung by a large mandate loss and complexities in the deals.

Sources close to the transactions said AMP had a preference to secure agreements for both deals and announce them together, giving investors more certainty over the dismantling and sale of the $44bn infrastructure and real estate unit. The private markets division was rebranded Collimate Capital earlier this year, as AMP stepped up efforts to spin it off on the ASX, a plan set to be dumped.

US firms Apollo Global Management and DigitalBridge are said to be still jostling for the global infrastructure part of the business, after other suitors including private equity giant TPG and Bridgepoint Group fell away.

The entire infrastructure equity unit – across local and global investments – posted revenue of $236m last year and had earnings before interest and tax of $118m.

Analysts said given the global division’s sizeable contribution to earnings the business may attract a bid of more than $600m, depending on whether the carry paid to fund managers is included or excluded from terms.

The global infrastructure unit houses investments including in network internet and data group Everstream Solutions, London Luton Airport, the UK’s Newcastle Airport and cloud computing and data centre firm Expedient.

The global infrastructure equity division is characterised by closed-end funds. The divestment of that arm is well advanced as AMP also puts the finishing touches on a deal with property group Dexus for the sale of its local real estate and infrastructure businesses, with assets of $31bn.

The Australian revealed on April 17 the deal for the local platform will be worth between $200m and $300m, with AMP set to receive additional amounts potentially worth hundreds of millions of dollars flowing from its co-investment holdings. Dexus and AMP declined to comment.

The transaction with Dexus is being hindered by instability in the Collimate Capital property business, with the group rocked by the imminent loss of a major mandate. Sources said the Dexus deal’s terms provided a sliding scale for price changes if mandates were yanked from AMP.

Superannuation heavyweight UniSuper is believed to have tapped rival GPT to manage a portfolio that has been run by AMP. The final composition of the assets is not yet known but AMP had long managed assets for the superannuation fund and last year completed two shopping centre redevelopments for UniSuper.

It finished an $800m redevelopment of Perth’s Karrinyup Shopping Centre and also undertook a major redevelopment of Sydney‘s inner city Marrickville Metro. Both these assets are part of the shift.

UniSuper already backs GPT‘s wholesale office and shopping centre funds and has a stake of about 11 per cent in the listed company in keeping with its strategy of holding long-term interests in major companies.

All up there about four retail assets and two Sydney office assets that will change management with a total quantum of about $2.5bn. The parties declined to comment on the mandate shift.

But Collimate Capital appears to have kept its grip on two key super regional malls – Sydney‘s Macquarie Centre and Pacific Fair on the Gold Coast.

AMP last October introduced two new partners into the AMP Capital Retail Trust, which owns majority stakes in the malls, with Cbus Property and UniSuper, making a $2.2bn investment.

The sale of the private markets business in two tranches reflects highly-complex transactions with many moving parts. Mirvac has sought to gain due diligence for a proposal that would install it as manager of the AMP Capital Wholesale Office Fund. Mirvac wants diligence to put its proposal to investors, and initially claimed majority support of its register.

However, as the sale of the local elements of Collimate Capital’s platform are due to be announced to Dexus, momentum has swung towards staying with existing management as it finds a new home within Dexus.

A vote to change the constitution of the near $8bn vehicle is slated for Thursday and would allow the manager to be changed with a 50 per cent vote.