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- AMP (AMP) and Ares Management have entered a non-binding heads of agreement to pursue the formation of a joint venture for AMP Capital’s private market businesses
- The joint venture is valued at $2.25 billion, with Ares set to acquire 60 per cent for $1.35 billion
- The company says the joint venture will enable the private markets business to benefit from Ares’ brand and global strengths in investment and distribution
- AMP is up 0.36 per cent, trading at $1.40
AMP (AMP) and Ares Management have entered a non-binding heads of agreement to pursue the formation of a joint venture for AMP Capital’s private market businesses.
The private markets joint venture is valued at $2.25 billion, with Ares acquiring 60 per cent for $1.35 billion.
The joint venture is expected to raise $500 million of debt to maximise capital efficiency, which would reduce the pro-rata equity contributions for each party in the joint venture.
Ares, with a current market capitalisation of more than US$13 billion (roughly A$16.5 billion), has a global footprint and capabilities in debit, private equity and real estate.
At the end of 2020, Ares had US$197 billion (around A$250 billion) in assets under management (AUM), after growing both AUM and fee-related earnings of over 30 per cent during the year, on top of fundraising a record US$41.2 billion (roughly A$52 billion).
Ares managed US$18.3 billion (approximately A$23 billion) in infrastructure and real estate AUM, with over 100 investment professionals across Europe and North America.
Under the proposed transaction, Ares will acquire 60 per cent of private markets businesses of infrastructure equity and debt, real estate and other minority investments, plus assume management control, with AMP retaining the remaining 40 per cent.
AMP will retain up to $900 million of assets and contingent consideration related to the current private markets business, made up of seed and sponsor investments of around $500 million and surplus capital released of $100 million.
The company says the joint venture will enable the private markets business to benefit from Ares’ brand and global strengths in investment and distribution, plus continue to build upon AMP Capital’s well-established investment capabilities.
“We believe the proposed partnership with Ares would deliver strong outcomes for our clients, our shareholders and our broader business. We expect it would strengthen the business and significantly accelerate our strategy to grow private markets, while de-risking our international expansion plans, and bringing forward the value in AMP Capital for our shareholders,” said AMP Chair Debra Hazelton and Chief Executive Francesco De Ferrari.
“The transaction will enable AMP to increase focus on the transformation of our wealth management business in Australia, drive the continued growth of AMP Bank and New Zealand wealth management and benefit from driving further efficiency.”
AMP is up 0.36 per cent, trading at $1.40 at 10:27 am AEDT.
