The Macquarie Group Ltd (ASX: MQG) share price is on watch this morning after revealing a deal to buy an AMP Limited (ASX: AMP) business.
Macquarie buys AMP GEFI business
The global investment bank announced that its Macquarie Asset Management (MAM) division has entered into a binding agreement to buy AMP Capital’s global equity and fixed income (GEFI) business for up to $185 million.
There is a base payment of up to $110 million and an earn-out of up to $75 million payable after the second anniversary on the transaction’s completion. Final terms are subject to revenue targets.
AMP’s GEFI business has strategies relating to fixed income, Australian listed equities, listed real estate and listed infrastructure. It currently manages around $60 billion in assets under management (AUM) for AMP Australia as well as external institutional, retail and direct clients.
With the deal, Macquarie expects to acquire assets and teams focused on GEFI’s global clients, as well as new and expanded investment capabilities in Australia and several international markets.
As a result of this transaction, Macquarie Asset Management’s calculated AUM is approximately $720 billion.
Management comments
Macquarie Asset Management boss Ben Way said: “This transaction represents another opportunity, following our recent acquisition of Waddell & Reed, to add scale and expand our public investment capabilities. It cements Macquarie’s position as the leading investment manager in Australia by AUM and provides new clients joining us from AMP Capital with access to Macquarie’s diversified investment offerings and global platform. Clients will be at the centre of our considerations as we work closely with AMP on a successful integration.”
Summary thoughts on this deal
AMP thought the business needed greater scale to compete effectively. But it has also been trying to sell parts of its business for some time. Whilst it may have preferred to sell the entire AMP Capital business, this is a decent chunk of it at for a price that AMP must have been happy to do the deal at.
This is a fairly small deal for Macquarie, but increased scale and less competition are two helpful benefits.
However, there are other ASX dividend shares that I’m looking at than these two.
