The AMP Limited (ASX: AMP) share price is in focus after the business sold one of its divisions for $428 million.
AMP sells infrastructure debt platform for $428 million
AMP’s private markets business, PrivateMarketsCo, has entered into a binding agreement to sell its infrastructure debt platform to Ares Management Corporation (NYSE: ARES) for a total amount of $428 million.
The agreement comes after PrivateMarketsCo’s decision to focus on its key strength, which it says is managing equity investments in real estate and infrastructure.
This sale will simplify the structure, whilst realising significant value from the proposed transaction to support the growth of these businesses.
There has been strong progress made operationally on separating PrivateMarketsCo from AMP. The demerger remains on track to complete in the last part of the first half of 2022.
This sale is expected to complete in the first quarter of 2022, subject to various conditions.
What will the sale proceeds be used for?
AMP said the cash proceeds from the sale will strengthen the capital position of the AMP Group.
Separation of the balance sheet and allocations of surplus capital between AMP and PrivateMarketsCo is continuing as part of the demerger preparations, with a further update to be provided closer to the date of the demerger.
The sale will also cease the capital requirements for PrivateMarketsCo for the infrastructure debt platform.
Management comments
The PrivateMarketsCo CEO Shawn Johnson spoke of the benefits and what will remain in the business after the sale:
“PrivateMarketsCo and AMP will realise significant value from the divestment, as well as retaining our valuable sponsor investments and carried interest in the closed infrastructure debt funds. This will provide a strong revenue stream in coming years as we demerge PrivateMarketsCo and accelerate the momentum in our businesses.
“PrivateMarketsCo’s go-forward business will be focused on our key strength in managing equity investments in real estate and infrastructure with A$44 billion in assets under management (AUM), and a pipeline for developing new products that meet the needs of our clients.”
Summary thoughts
AMP has had a difficult year (down 41%), five years (down 81%) and so on. But getting value from its non-core assets is a good move.
However, I’m not sure on the growth potential of AMP, so I’m happy to leave investing in AMP to other investors. I hope it can go through a recovery though, for shareholders.