AMP explores options to spin off businesses

AMP has appointed a team of consultants and lawyers to explore options for spinning off parts of the company after receiving a spike in unsolicited interest from third parties wanting to buy its assets.

The embattled financial services provider claimed it was committed to its existing strategy, including restructuring its wealth management arm to simplify products and growing its asset management business AMP Capital by expanding its private markets business.

"However, AMP periodically receives unsolicited interest in its assets and businesses, and recently has experienced an increase in interest and enquiries," AMP said in a statement to the ASX on Wednesday morning. "The board has therefore decided to undertake a portfolio review to assess all opportunities in a considered and holistic manner, evaluating the relative merits as well as potential separation costs and dis-synergies, with a focus on maximising shareholder value."

AMP is exploring options to spin off parts of the company. Credit:Louie Douvis

The review may find the company's current mix of assets and businesses delivered better value for shareholders than any divestments or other deals, it added. Credit Suisse, Goldman Sachs and King & Wood Mallesons have been appointed as advisers to manage the review.

Newly appointed chair Debra Hazelton reiterated support for AMP's strategy, including the pivot to private markets in AMP Capital – the business that has been engulfed in scandal leading to the demotion of its chief executive Boe Pahari after investor outrage over the company’s handling of a sexual harassment complaint against him.

"However, we have taken a decisive step to undertake a portfolio review to ensure we appropriately assess all options to maximise shareholder value in a considered and disciplined manner," Ms Hazelton said.

Merlon Capital principal Hamish Carlisle said last month AMP should sell the private markets business, which includes unlisted infrastructure and property markets.

"Our strong view is they shouldn’t own that private markets business," he said. "The company has a disastrous track record in terms of capital allocation and as we’ve seen recently, in terms of their capacity to manage businesses. We think the sooner they spin off that business, the better."

AMP reported double-digit falls in profit at its full-year results last month, with operating earnings falling across all four of the company's divisions – 43 per cent in AMP's domestic wealth management business, 40 per cent in AMP Capital, 30 per cent in AMP Bank and 18 per cent in its New Zealand wealth management arm.

The sale of AMP Life came as a shock to many investors, but chief executive Francesco De Ferrari has maintained the sale shored up the company's capital position and enabled it to return $544 million to shareholders.

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