AMP (ASX:AMP) asset sales part of wealth sector transformation

The trouble at AMP led to a portfolio review to consider asset sales across the business. Moreover, there are many interested parties.

Western Areas takeover Mainstream share price takeover M&A bidding war asx shares asset sales and mergers and acquisitions represented by two business men playing tug of war with rope Cleanaway share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

When AMP Limited (ASX: AMP) appointed a new chair, Debra Hazelton, she kicked off an asset portfolio review. This came on the heels of the company completing a $3 billion sale of its life insurance assets in July. AMP has made it clear that it is considering further asset sales after receiving many unsolicited bids. At the time of writing, many private equity firms are rumoured to be running the ruler over the troubled $4.6 billion company. In some cases they are considering specific parts of the business, like AMP Capital.

The AMP share price fell 5.2% over last week's trading. This was largely due to the company reporting net cash outflows of $1.95 billion from its Australian wealth management arm during the September quarter. Over year-to-date trading, AMP has seen $6.35 billion in outflows. 

Which companies are in the asset sale race?

A column in The Australian has placed private equity firm, Kohlberg Kravis Roberts (KKR) squarely in the frame, with the company believed to be working on a buyout proposal. What's more, the private equity firm is currently completing the purchase of 55% of Colonial First State wealth management from Commonwealth Bank of Australia (ASX: CBA). Any potential acquisition would need to integrate with these assets in some manner. 

Coincidentally, AMP's problems have occurred at the same time the large banks are retreating from the wealth management businesses.  Elsewhere in the sector, IOOF Holdings Limited (ASX: IFL) purchased MLC from National Australia Bank Ltd (ASX: NAB) for $1.44 billion. Nonetheless, KKR was also a potential suitor at the time. As a result, Westpac Banking Corp (ASX: WBC) remains the last large bank to sell its wealth management business.

Ms Hazelton committed to providing an update on the portfolio review by the end of the year. However, a real estate asset sale may occur sooner than that due to buyer interest. Recently, Vicinity Centres (ASX: VCX) was rumoured to have joined the fray in the hunt for the AMP real estate portfolio. DEXUS Property Group (ASX: DXS), Lendlease Group (ASX: LLC) and Charter Hall Group (ASX: CHC) are among other companies mentioned. 

Foolish takeaway

While there are many rumours at play, it is uncertain exactly which way the management of AMP will proceed. Subsequently, there has been a lot of speculation about the asset sale of the company's real estate portfolio. Yet, there remain persistent reports of approaches for either the AMP Capital assets, or for the entire company. 

Moreover, the Australian Competition and Consumer Commission (ACCC) has remained silent on the potential for consolidation. 

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Oil industry worker climbing up metal construction and smiling.
Energy Shares

ASX 200 energy shares lead the market as US trade deals fuel optimism

ASX energy shares lifted 3.94% as more US trade deals led to improved market sentiment.

Read more »

A female ASX investor looks through a magnifying glass that enlarges her eye and holds her hand to her face with her mouth open as if looking at something of great interest or surprise.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Broker Notes

These ASX 200 shares could rise 50% to 60%

Brokers believe these shares could deliver big returns for investors.

Read more »

A girl is handed an oversized ice cream cone with lots of different flavours.
Best Shares

8 ASX All Ords shares that tripled in value in FY25

Just 8 out of the 500 companies making up the ASX All Ords achieved share price growth of 200% or…

Read more »

Broker written in white with a man drawing a yellow underline.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Woman with a scared look has hands on her face.
Broker Notes

Bapcor shares fell more than 30% yesterday. Should investors buy in the dip?

Is this a value opportunity?

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Broker Notes

Broker raises price targets on 2 ASX 200 shares to buy

Ord Minnett has just upped its 12-month share price targets on 2 buy-rated ASX 200 stocks.

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX All Ords stock just rocketed 34% on strong earnings growth

Investors just sent this ASX All Ords stock surging 34%. Here’s what’s happening.

Read more »