Wealth management giant AMP could be forced to recut its deal to sell its domestic real estate and infrastructure equities business to Dexus due to delays caused by regulatory approval issues in China.
AMP Limited announced an agreement to sell the bulk of its Collimate Capital business to property trust Dexus in April, in a deal that included an upfront cash payment of $250 million.
However, in an update released to the ASX on Monday morning, the wealth giant said there were doubts about whether the relevant Chinese regulator would grant the necessary approvals by the agreed date of January 27.
Under the current agreement with Dexus, the deal requires approval from the applicable regulator in China to transfer AMP’s interest in China Life AMP Asset Management (CLAMP) out of the sale perimeter. Dexus and AMP each have the right to terminate the agreement from January 27 if all conditions have not been satisfied or waived by that date.
“While AMP continues to work towards achieving regulatory approval, there is uncertainty around achieving this date,” the statement said.
AMP and Dexus have agreed to extend the waiver date to February 28, but if these conditions are not satisfied or waived by January 26, the base purchase price will be reduced by $25 million to $225 million, and the remaining potential earn out amount (approximately $26 million) will be forfeited.
The two firms are also discussing a revised transaction structure, which would see most legal entities and employees move across to Dexus prior to the approval from the Chinese regulator. The transfer of China Life AMP Asset Management would occur following the necessary regulatory approval.
“AMP will provide further details on the revised transaction structure if binding documentation is entered into and will keep the market informed of any material updates to the transaction,” the company said.
AMP previously flagged delays with the deal in November, informing the ASX that the timeline for completion may not be met due to regulatory approval processes.
In February last year, AMP rebranded its $44 billion funds management platform, changing its name from AMP Capital to Collimate Capital as it planned a demerger and separate listing on the stock exchange. However, it abandoned the demerger plans after announcing the sale of the Collimate Capital businesses.
The international infrastructure equity business of Collimate Capital is being sold to DigitalBridge, and AMP said on Monday the outstanding regulatory approval is in the final stages, with completion expect to occur by February.
The sale of Collimate Capital marks AMP’s exit from asset management amid a major restructure of the business, including the sale of its flagship life insurance business in 2020.
In 2021, AMP Capital was hit with a sexual harassment scandal that triggered an investor revolt leading to a string of high-profile resignations and fund outflows.
AMP’s remaining assets include its small bank, superannuation funds and financial advice network as the company under the leadership of chief executive Alexis George seeks to refocus on domestic wealth management.
AMP’s board and management has committed to returning $1.1 billion to shareholders by the end of June next year.
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Source: Thanks smh.com