M&A Activity • Apr 28, 2022
M&A Activity
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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 earnouts.
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.
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:
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.
1 Subject to satisfaction of conditions precedent
2 This represents Net Asset Value as at FY 21
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.
"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."
"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."
| Component | Value |
|---|---|
| Upfront cash proceeds | A\$892 million |
| Retained future carry and performance fees | A\$57 million |
| Retained value (PCCP investments and surplus capital) | A\$508 million |
| Value realised and retained from Collimate Capital real estate and infrastructure equity businesses |
A\$1.46 billion |
| Proceeds from sale of infrastructure debt platform | A\$578 million |
| Total value of Collimate Capital business | A\$2.04 billion |
| Contingent cash consideration (potential future earn-out) | A\$480 million |
| Potential total value for Collimate Capital business with earn-outs | A\$2.52 billion |
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.
Completion of the sale to Digital Bridge is subject to conditions precedent, including:
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.
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28 April 2022
Background
Collimate Capital business units
Key transaction elements
Other considerations
| Real Estate – Domestic |
Infrastructure Equity – Domestic |
Infrastructure Equity – International |
|
|---|---|---|---|
| Leading Australian real estate manager | Manager of diversified infrastructure portfolio | Leading global manager in infrastructure equity | |
| A\$21b Invested AUM1 |
A\$10b Invested AUM1 |
A\$9b Invested AUM1 |
|
| Team of ~500 real estate professionals | 25 investment professionals focused on active asset management |
Over 30 investment professionals focused on asset origination and active asset management |
|
| 57 direct institutional clients located predominantly in Australia |
88 direct institutional clients | 165 direct institutional clients located in the largest global markets |
|
| Top 8 APAC Real Estate Manager2 |
ESG focus Founding member of GRESB Infrastructure |
Top 10 Global Infrastructure Equity Manager3 |
|
| Sector expertise | Sector expertise | Sector expertise | |
| Retail Office Logistics |
Energy/ Health/ Transport/ PPP Utilities Logistics Social |
Transport/ Health/ Energy/ Logistics Digital Social Utilities |
|
Represents Net Asset Value as at FY 21; invested AUM excludes uncalled commitments; excludes JV-related AUM
Rankings per ANREV Survey 2021, top 10 managers by non-listed real estate funds AUM Asia-Pac strategy.
Rankings per Infrastructure Investor 100 2021, league table based on capital raised over preceding 5-year period.
Transaction expected to complete by Q4 2022, subject to regulatory approvals, applicable third party consents and key employee retention.
DigitalBridge is a leading global digital infrastructure investment firm headquartered in Boca Raton with key offices in New York, Los Angeles, London, and Singapore.
Transaction expected to complete in 2H 2022, subject to regulatory approvals in China for transfer of AMP's interest in CLAMP out of the sale perimeter and other conditions precedent
One of Australia's leading fully integrated real estate groups with exposure to Australian office, industrial, retail and healthcare properties
Dexus' A\$17.8 billion development pipeline provides the opportunity to grow both portfolios and enhance future returns
Represents Net Asset Value as at FY 21; invested AUM excludes uncalled commitments; excludes JV-related AUM
| Component | Value | |
|---|---|---|
| Cash proceeds | ||
| - Sale of real estate and domestic infrastructure equity business |
- A\$430 million |
A\$892 million |
| - Sale of international infrastructure equity business |
- A\$462 million |
|
| Retained value and future performance fees and carry | ||
| - PCCP equity stake and seed investments |
- A\$208 million |
|
| - Rights to future performance and carry in certain international infrastructure equity funds |
- A\$57 million |
A\$565 million |
| - Release of excess liquidity |
- A\$300 million |
|
| Value of Collimate Capital real estate and infrastructure equity businesses | A\$1,457 million | |
| Proceeds from sale of infrastructure debt platform | ||
| - Cash consideration |
- A\$428 million |
A\$578 million |
| - Retained sponsor assets and rights to carried interest |
- A\$150 million |
|
| Total value of Collimate Capital business1 2 | A\$2,035 million | |
| Potential future contingent consideration | ||
| - Maximum potential earn-out on real estate business and domestic infrastructure equity |
- A\$300 million |
Up to A\$480 million |
| - Maximum potential earn-out on international infrastructure equity |
- A\$180 million |
|
| Potential total value of Collimate Capital business with earn-outs | Up to A\$2,515 million | |
| 1. The incremental transaction and separation costs for the sale of Collimate Capital's business is approximately A\$20 million post tax. |
||
| 2. AMP Limited will retain 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 Global Equities and Fixed Income (GEFI) business. |
AMP LIMITED Market update – April 2022 9 |
(A\$m)
| FY 22 priorities | ||
|---|---|---|
| REPOSITION | Invest to grow AMP Bank — — Grow the North platform, building new relationships with external financial advisers Deliver stable earnings and optimal client outcomes in Master Trust — and NZWM — Accelerate the transformation of Advice |
Grow AMP Bank — Focus on EFA flows in platforms — |
| SIMPLIFY | Execute the demerger — — Redefine and right-size the operating model for agility and efficiency Continue to review portfolio of assets to ensure AMP is the — right owner — Enhance shareholder value through disciplined capital management |
Complete separation of Collimate Capital in — preparation for trade sales Reduce cost base — Launch new purpose and values — |
| EXPLORE | — Establish direct-to-consumer solutions in selected areas Develop leading position in retirement — Explore adjacent new business models (organic and inorganic) — |
Explore new business opportunities — |
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