AMP and Macquarie share prices on watch following GEFI sale

We examine the key points from AMP’s announced sale of its GEFI business to Macquarie Group.

There were no dramatic share price moves from Macquarie Group or AMP on Thursday, even as AMP announced it would be selling AMP Capital's Global Equities and FIxed Income (GEFI) business to Macquarie.

AMP’s GEFI business, which currently has approximately $60 billion in assets under management, boasts operations spanning fixed income, Australian listed equities, listed real estate and listed infrastructure. GEFI’s run-rate revenue for fiscal 2021 is $90 million and its earnings (underlying) ~$10 million.

The sale price for GEFI is for up to $185 million.

According to AMP management, the deal will help the firm deliver on its renewed emphasis of focusing on 'high-growth opportunities', primarily within private opposed to listed or public markets.

In addition to this, management noted that AMP Capital remained 'in the process of transferring the Multi-Asset Group business to AMP Australia to create an end-to-end superannuation and investment platform business.'

Other comments

Commenting on the sales announcement, AMP's Acting CEO, James Georgeson said:

'In bringing together two well-known Australian investment businesses with strong track records, we're pleased to deliver such a positive outcome for our clients, our GEFI teams and AMP shareholders.'

On the other hand, Head of Macquarie's Asset Management division, Ben Way, commenting on the implications of the deal, said:

'It cements Macquarie's position as the leading investment manager in Australia by AuM and allows us to further diversify our client offering and bring new opportunities to clients joining us from AMP Capital.’

Following the completition of the transaction, Macquarie said it would have pro-forma assets under management of around AUD$720 billion.

Do you have a view on AMP or Macquarie? Whatever you think, you can use CFDs to trade stocks and other assets, through IG’s world-class trading platform.

For example, to buy (long) or sell (short) the ASX-listed stocks we have discussed today using CFDs, follow these easy steps:

  • Create an IG Trading Account or log in to your existing account
  • Enter <Company name> in the search bar and select it
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

For investors not looking to trade stocks, you can invest in shares directly through our share trading service.

Specifics of the deal

On a more granular level, the sale price of up to $185 million is made up of two components.

Firstly, it is made up a cash payment of $110 million, with the remaining $75 million cash earnout payable 2 years after the transaction is completed (the second anniversary).

Moreover, the deal includes both GEFI’s existing assets as well as its staff, which will transfer to Macquarie following the completion of the sale.

Importantly, the reason the sale price is ‘up to’ $185 million, is because it is based on AMP meeting a number of conditions, with the financial firm highlighting revenue hurdles as one such condition. No further specifics, however, were provided.

Should no issue arise, AMP said it expected the deal to be finalised during the first quarter of calendar 2022.

Despite the hefty price tag, AMP management noted that the expectation was for the post tax gain to have a ‘broadly neutral’ impact as a result of one-time costs and adjustments.

The AMP share price finished the session flat, while Macquarie's stock closed up slightly.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.