Takeover, page-15

Blackrock showing an interest in AMP Capital

BRIDGET CARTER MARCH 31, 2019

AMP Capital, the AMP subsidiary that controls $187.2 billion worth of assets, is believed to have caught the eye of Blackrock, the world’s largest asset manager.

Apparently, Blackrock has been circling at a time that some of the top executives of AMP Capital are showing an openness to the idea of being acquired by another party.

The value of their shares in the headstock have collapsed due to some of the company’s woes, including the fee-for-no-service scandal that emerged during the recent banking royal commission.

However, while speculation is mounting that Blackrock is eager to buy the business, AMP is not a seller of its prized operation that is a major earner for the troubled financial group.

Some believe that should the threat of top AMP Capital executives departing the business exist, AMP could face no choice but to enable a sale.

However, others disagree, saying that much of AMP Capital’s funds to acquire assets flow through from the parent company from AMP corporate relationships and customers, and that should top executives leave, recently appointed chief executive Francesco De Ferrari has the connections to find high-quality replacement in the global finance community.

Blackrock is eager to gain scale with respect to real assets or alternative assets.

AMP Capital generated $167 million in profit for 2018 for its parent, up 7.1 per cent from the previous year.

It was the company’s second largest earning division behind Australian Wealth Management.

Based in New York, Blackrock controls $US6.44 trillion ($9 trillion) of assets under management including real estate across various asset classes and infrastructure assets, mainly in Europe and the US.

In Australia it owns landmark buildings in central Sydney.

Blackrock in 2013 purchased the former Macquarie Global Property Advisers business.

One possibility is a party such as Blackrock launches a takeover for AMP, although most believe that suitors like Blackrock and Macquarie Group — also discussed as a possible buyer of AMP — would not be eager to secure the other parts of the business.

On face value, the price of AMP looks attractive, with a current market value of $6.14bn compared to $14.7bn about a year ago.

Currently, AMP is working hard to finalise its $3.3bn sale of its life operations to Resolution Life. The next asset expected to be divested at AMP is its New Zealand wealth operations, which some expect could be by way of a listing across the Tasman.

While some discussion has centred on AMP’s bank, the thinking is that chairman David Murray — a career banker — is unlikely to be eager to divest the operation.