The $2b deal AMP missedAMP Capital struck an alliance with...

The $2b deal AMP missed

AMP Capital struck an alliance with Japan's financial services giant MUFG in 2011, opening the door to strategic expansion opportunities. But it missed its shot at co-owning CBA's funds management business.When AMP brought its banking and wealth management businesses under a single corporate structure on Thursday it was billed by chief executive Francesco de Ferrari as “enabling the organisation to pursue the significant opportunity for providing more holistic wealth services”.While the deal is sensible it is the sort of transaction undertaken by an organisation with limited strategic options. No shareholder would knock back the streamlining of the management and implementation of cost synergies.AMP CEO Francesco De Ferrari never had the capital to go ahead with a deal that would have transformed AMP Capital.

But lack of capital meant the options on the table when cooking up the deal were extremely limited.Lack of capital has been one of the two key problems besetting AMP for several years. The other is brand damage from the Hayne royal commission.It was lack of capital which prompted the complicated deal to sell AMP Life to Clive Cowdrey’s Resolution Life.Lack of capital was the reason behind AMP’s failure to go ahead with a deal that would have benefited its best business, AMP Capital.Chanticleer understands that AMP Capital’s strategic alliance with Japanese institution MUFG meant that both parties could jointly participate in M&A expansion transactions initiated by either party in Australia.

The strategic alliance was signed in 2011 when MUFG bought a 15 per cent stake in AMP Capital for $425 million.AMP will not comment on the contents of the strategic alliance. But in keeping with the terms of the deal signed eight years ago, AMP Capital would have been able to join MUFG in its $4 billion purchase of Commonwealth Bank of Australia’s funds management business, Colonial First State Global Asset Management (CFS GAM).Instead,
MUFG bought the CBA business and renamed it First Sentier Investors. AMP Capital missed out on a $2 billion transaction that would have transformed its only global business.