AMP Limited today announces it has entered into an agreement for the sale of Collimate Capital’s international infrastructure equity business to DigitalBridge Investment Holdco, LLC, a wholly-owned subsidiary of DigitalBridge Group, Inc. (DigitalBridge) for an upfront consideration of A$462 million and total value of up to A$699 million.
Combined with the A$430 million from the sale of the domestic infrastructure equity and real estate business announced on 27 April, 2022 and the A$578 million from the sale of the infrastructure debt platform completed in February 2022, this values the total Collimate Capital business at up to A$2.04 billion including the value of retained assets, and up to A$2.5 billion when including the maximum earn-outs.
The AMP Limited Board intends to return the majority of net cash proceeds from the recent transactions to shareholders. The capital return will be subject to requisite regulatory and shareholder approvals. AMP will also use some of the proceeds to pay down corporate debt.
Overview of transactions
AMP has agreed to sell its international infrastructure equity business to DigitalBridge, a leading global digital infrastructure investment firm, in a transaction that values the business at up to A$699 million comprising approximately A$462 million upfront cash payment for the management platform and seed and sponsor investments, an estimated A$57 million of retained future carry and performance fees, and an additional amount of up to A$180 million contingent on future fund raisings. The transaction, expected to complete by Q4 20221, includes:
• International infrastructure equity assets under management (AUM) of A$9 billion2
• The management platform, including Global Infrastructure Fund (GIF) series and other related funds and the majority of unrecognised future performance fees and carried interest
• All of AMP’s seed and sponsor investments in international infrastructure equity funds
• A substantial portion of the teams located across the UK and Europe, North America and Asia.
Impact on capital and separation costs
The net capital impact for AMP Limited of the sale of the international infrastructure debt and equity platforms and the real estate and domestic infrastructure equity business is expected to be an increase of approximately A$1.1 billion. The final amount will be confirmed post transaction completion.
Work to date on the separation of Collimate Capital’s businesses from AMP, as part of the demerger preparations, is well advanced. Accordingly, the incremental transaction and separation costs for the two transactions to sell Collimate Capital’s businesses is approximately A$20 million post tax.
Return of capital
As AMP finalises its capital and liquidity requirements, it is the Board’s intention to pay down a portion of its outstanding corporate debt and to return to shareholders the majority of the net proceeds from the two sales and the sales of the infrastructure debt platform and GEFI business. This is likely to be via a mix of capital return and on-market share buy-back.
The return of capital will be subject to requisite regulatory and shareholder approvals, and completion of the transactions. AMP will provide a further update closer to transaction completion as to the timing and quantum of the return of capital.
As announced yesterday, subject to the completion of the Collimate Capital sales, AMP will no longer pursue a demerger of Collimate Capital.
The Board determined that, when evaluated against a demerger, the two transactions would deliver greater value and certainty for shareholders, accelerate the realisation of that value, and provide greater stability for Collimate Capital’s clients and employees. As part of the transaction, key employees in Collimate Capital have also committed to moving to the new businesses to ensure continuity for clients.
AMP Limited Chair, Debra Hazelton commented:
“The transactions we have announced in the past two days represent a strong outcome for AMP shareholders and Collimate Capital stakeholders. It was clear in our 2021 portfolio review that we had two businesses that would be better separated and simplified and in doing so realise greater value and that is what we have achieved.
“AMP and Collimate Capital have built outstanding private markets businesses in infrastructure and real estate over many years. In selling these businesses to such respected specialists in DigitalBridge and Dexus, we are confident that the businesses’ clients and the talented teams transferring with them will benefit.
“Post separation and these sales, AMP Limited has a focused strategy to grow AMP Bank and the wealth management businesses under CEO Alexis George’s leadership with the benefit of a stronger capital and liquidity position.
“As we work through the capital implications of the transactions the Board will be focused on returning the majority of cash proceeds to AMP shareholders.”
AMP Chief Executive, Alexis George commented:
“This is an important moment for AMP shareholders, clients and our people, as we announce the sale of our remaining Collimate Capital business. These sales realise significant value for shareholders and deliver certainty for clients and for our people.
“In DigitalBridge and Dexus we are confident we have found the right owners for both businesses. They are focused on delivering strong returns for Collimate Capital’s clients and opportunities for our people. We expect both will add significant value through their scale, capability and depth of talent, which our teams will complement.
“Post completion of the two sales, AMP Limited will be a more focused entity, concentrated on driving our core banking and retail wealth businesses in Australia and New Zealand, with a core objective of accelerating our strategy and increasing our competitiveness.”
Total value for Collimate Capital
As noted in AMP’s announcement yesterday, the full earn-out for the real estate and domestic infrastructure equity business is dependent on the retention of all AUM in the nine months following completion. AMP considers it unlikely the full earnout will be received given anticipated loss of AUM. At this point, AMP anticipates approximately A$3.0 billion of AUM to leave the platform.
The full earn-out for the international infrastructure equity business is dependent on future fund raisings over several years and AMP anticipates the maximum earn-out may not be received.
In addition to the values in the above table, AMP Limited retains other assets that were previously part of AMP Capital, including the Multi-Asset Group (MAG), its China Life AMP Asset Management (CLAMP) investment, and proceeds from the sale of the GEFI business.
Conditions precedent to completion
Completion of the sale to Digital Bridge is subject to conditions precedent, including:
• Regulatory approvals
• Applicable client and third-party consents
• No material adverse effect occurring prior to completion
• Retention of key employees.
1Subject to satisfaction of conditions precedent
2This represents Net Asset Value as at FY 21
DigitalBridge (NYSE: DBRG) is a leading global digital infrastructure investment firm. With a heritage of over 25 years investing in and operating businesses across the digital ecosystem including cell towers, data centers, fiber, small cells, and edge infrastructure, the DigitalBridge team manages a $45 billion portfolio of digital infrastructure assets on behalf of its limited partners and shareholders. Headquartered in Boca Raton, DigitalBridge has key offices in New York, Los Angeles, London, and Singapore.
Mobile: +61 417 256 563
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Phone: +61 2 9257 9684
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