The ink has finally flowed, sealing a deal worth up to $1 billion for the buy-out of AMP’s newly-branded assets management arm Collimate Capital by property behemoth Dexus.
Its acquisition will add about $31 billion in Australian assets under management to Dexus’s portfolio and comes after weeks of speculation.
The deal also officially puts an end to plans for a demerger of Collimate—formerly AMP Capital—as a new entity, which was scheduled to trade on the ASX by June 30.
Under the agreement, AMP will divest Collimate’s real estate and domestic infrastructure equity business that comprises a platform of pooled funds and separately managed accounts.
The deal includes a $250 million upfront cash payment and an earn-out consideration of up to a further $300 million, subject to retention of assets under management nine months after the transaction’s completion.
However, it is deemed unlikely the full earn-out will be achieved given current expected loss of assets under management of circa $3 billion.
Additionally, Dexus also will offer to acquire co-investment stakes in the platform for as much as $450 million.
In confirming the deal, AMP chief executive Alexis George said Dexus would add significant value through its strong track record and experience in real estate and asset management.
“In Dexus we have found a strong owner for the real estate and domestic infrastructure equity businesses,” George said. “Their depth of talent will strongly complement our specialist teams.”
Dexus plans to retain Collimate’s key people as part of the transaction, “to continue to support the real estate business and entry into the infrastructure segment”.
“I am excited to announce this opportunity which positions Dexus as a leading real asset manager, with new capabilities and an expanded product offering, underpinned by our best practice governance and risk management framework,” Dexus chief executive Darren Steinberg said.
“It delivers on our strategic objectives of being a real estate partner of choice and delivering resilient income streams, while enhancing our ability to leverage the key megatrends benefiting real assets.
“Infrastructure is a logical next step for Dexus’s funds management business, underpinned by compelling sector fundamentals and a positive growth outlook.”
The transaction is expected to complete in the first half of 2023.
