The price of $ 5 billion is included The Australian Financial Report ‘The Street Talk column is roughly $ 1.50 per share. This should not be enough, as the share price has already exceeded this level.
However, the higher price argument will clash with the problem that has plagued AMP since the Hayne Royal Commission uncovered their flawed advisory business model.
The consulting business at AMP in its current form is uneconomical because the value chain of financial consulting causes excessive costs. The integration of advice and cash flow to AMP Capital extends the limits of advice in the long-term interest of customers.
Detailed statements
AMP chief Francesco De Ferrari has practically admitted that he needs the country’s regulators to simplify regulatory settings for financial advice, or millions of Australians will forego it.
Underpinning his plea for help is that AMP’s advisory business will struggle to make money by giving advice to the masses when the regulator needs very detailed advice.
AMP announced on Friday in response to Ares’ proposal that the portfolio review announced in September would continue.
“AMP has received great interest in its assets and businesses and is considering a number of options in a thoughtful and holistic manner, including continuing its three-year transformation strategy with an emphasis on maximizing shareholder value,” the company said.
In essence, AMP responded to Ares’ interest in the company with a proposal to break up. Every asset is offered for sale.
This strategy is based on the idea that the sum of the parts of AMP is worth more than the market values at which the company is operating.
Investment bankers, analysts, fund managers, and many commentators have said the business is worth more than it is today. Fund managers prefer pure corporations, which explains why there are corporate divisions in Australia.
Ares, with $ 179 billion in assets under management, would value the AMP Capital business, with $ 189 billion in assets under management, likely between 0.7 percent of assets under management and 2 percent of assets under management. These valuation metrics are the highest amounts paid out this year for key fund management activities.
Ares could arguably pay more if it can be sure of getting a good price for AMP Bank and entering into long-term contracts for funds managed on behalf of AMP clients and AMP’s former life insurance business.
However, due to the already existing concentration in this sector, it can be difficult to sell the consulting business.
Unfortunately, AMP has suffered severe brand damage, which explains the continued outflow of roughly $ 2 billion per quarter.
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