Ares’s $1 Billion AMP Deal Puts It in Infrastructure Big League

Ares Management Corp.’s deal for a $1.1 billion holding in the infrastructure and real estate unit of Australia’s oldest wealth manager puts it on course to become one of the industry’s major players.

The agreement to buy a 60% stake in AMP Capital’s private markets business gives the Los Angeles-based alternative asset manager control over a A$60 billion ($47 billion) global portfolio of infrastructure and real estate investments, from airports in London and Melbourne and fiber in Sweden to shopping malls and office buildings across Australia.

“Ares could be among the largest infrastructure managers in the world” on the back of the AMP deal, according to Hong Kong-based Bloomberg Intelligence analyst Sharnie Wong. “Unlisted and listed infrastructure assets have outperformed traditional asset classes such as equities and bonds in the past 12 years through different economic conditions,” she said.

Read more about Brookfield’s $4.1 Billion energy deal this month

The acquisition, its biggest outside of the U.S., will give the traditionally credit-focused Ares the scale to compete with other global firms such as Macquarie Group Ltd.’s infrastructure arm and Mitsubishi UFJ Financial Group Inc.’s First Sentier Investors.

Infrastructure Deals

Ares, co-founded by billionaire Tony Ressler, is riding a wave of infrastructure dealmaking, where funds flush with record amounts of capital invest in assets with predictable returns as global yields stay rooted at historic lows. Deals targeting investment management businesses with some focus on infrastructure have been steadily rising globally since 2015 and are set to continue this year, according to data compiled by Bloomberg.

“We believe we can add significant value through our global scale, relationship network, investor relationships and our broad, collaborative investment platform,” Ares Chief Executive Officer Michael Arougheti said in the statement. Ares raised a record $41 billion in funds last year.

What Bloomberg Intelligence Says:

AMP’s cash proceeds of A$1.55 billion from the sale of 60% of its private-markets business, comprising infrastructure and real estate, could potentially be returned to shareholders or aid the turnaround of its wealth-management and bank operations.

Sharnie Wong, BI analyst

The transaction values AMP’s asset management arm at A$3.15 billion, and will see AMP retain the public markets businesses of AMP Capital, while looking to sell or find a partner for its global equities and fixed-income business. Bloomberg reported the plans earlier this week.

Shares in AMP rose the most in about four months to A$1.5 in Sydney, giving the company a market value of about A$5.1 billion.

AMP effectively put itself up for sale last year when a sexual harassment scandal led to another boardroom shakeout, sending the share price to record lows. The watered-down deal comes two weeks after Ares abandoned an offer to buy all of the 172-year-old AMP Ltd.

Series of Scandals

The sale further shrinks AMP, which last year offloaded its life insurance unit to Resolution Life for A$3 billion. Francesco De Ferrari is now left with a wealth management business that’s been bleeding funds following a series of scandals, and a domestic bank whose A$20 billion mortgage book is just a fraction of the nation’s A$1.8 trillion home-loan market.

The firm, which started in 1849 as a mutual provident society owned by policyholders, listed on the stock exchange in 1998. The stock first traded at about A$36, at the time valuing AMP at around A$25 billion, and making it Australia’s third-largest company behind National Australia Bank Ltd. and the forerunner to what is now BHP Group Ltd.

Ares and AMP said they will finalize the transaction over the next 30 days before the deal can be put to AMP shareholders.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.