AMP's private markets spin-off is an opportunity for the institution to put a recent spate of scandals behind it, but is it going to be enough to satisfy disillusioned shareholders?
Nobody really expected that AMP would take its private markets business public. But with a potential Ares deal finally dead and buried, this could be the wealth giant’s only way to satisfy increasingly ornery shareholders. Is that the best option?
Probably not, seeing as departing chief executive Francesco De Ferrari did not believe AMP Capital was capable of building the necessary scale to compete in global markets itself and advocated spinning out stakes in its various businesses.
“We are competing against global players, a lot of the trends have shifted to passive, and ultimately it is a scale game. Size really counts in terms of being able to continuously invest in the platform and in global distribution…We have great product, we simply don’t have the scale required to grow this globally,” Mr De Ferrari told media in February.
Given that clear-eyed assessment of Capital’s prospects, it’s unclear what’s changed. What exactly this demerger will do to reverse the fortunes of the wealth business is also unclear. The simplification of management structure will have little impact on the forces working against financial advice in Australia, though new CEO Alexis George – who did a bang-up job of prepping ANZ’s wealth business for sale – will likely have more to say on this at next week’s AGM.
Also buried in the announcement was the fact that a demerger would allow AMP Capital to “establish a new brand”, the first acknowledgement that the recent spate of sexual harassment scandals at AMP may have harmed the wealth giant’s image and led to the flight of a number of high-profile executives.
AMP hopes to solve that brain drain by putting in place a new management equity plan to “attract and retain talented investment professionals and management”. One talented investment professional AMP won’t be retaining is controversial global infrastructure equity head Boe Pahari, who has decided to head for the exit.
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