AMP (ASX:AMP) share price slides on Ares update

The AMP share price is edging lower in morning trade. We take a look at what AMP's 2 ASX announcements mean for shareholders.

Bernd Struben

Author bio Bernd Struben earned his BA in economics from the University of Michigan in 1991, with post-graduate studies in environmental economics at the University of Connecticut. Over the years he’s written about and analysed the tourism industry in the Caribbean; Europe’s commercial real estate markets; and, since moving to Australia in 2010, global and Aussie share markets. Bernd studies geopolitical and macroeconomic trends, alongside sector and company specific data, to gauge what he believes could be tomorrow's best investments. In his free time, you might find Bernd at the beach with his family or working on his next science fiction novel. Areas of expertise Australian and global share markets Macroeconomic and geopolitical trends Real estate Education Economics, University of Michigan Favorite investment quote "The four most dangerous words in investing are: 'This time it's different." — Sir John Templeton

Published March 29, 2021 11:19 am AEDT

AMP Ltd (ASX: AMP) shares are edging lower in morning trade following two market updates from the financial services giant. At the time of writing, the AMP share price has slumped 0.37% to $1.34.

Let's take a look at what the S&P/ASX 200 Index (ASX: XJO) company announced.

Falling ASX share price represented by woman looking shocked at mobile phone — Image source: Getty Images

Joint venture update

On Friday 26 March, AMP drew ASX 200 investor attention when it reported a potential joint venture (JV) with Ares Management Corp (NYSE: ARES).

Under the proposed deal, Ares would have had a 60% stake and management control of the JV. AMP, in turn, would have received $1.55 billion cash (before associated costs) for its private markets businesses, which cover its unlisted property and infrastructure funds.

The AMP share price is on the slide today after the company reported this morning that the 30-day exclusivity period with Ares for the proposed transaction has concluded.

The company said Ares has expressed an interest in acquiring 100% of the private markets businesses. It added that while it is still working with Ares towards a potential transaction, there is "no certainty that a transaction will proceed"… including the particular terms and size of a potential deal. Shareholder approval of any deal would also still be required.

What else did AMP announce?

In a separate ASX release this morning, AMP reported it is ending its management agreement with Precinct Properties New Zealand Ltd (NZE: PCT), enabling Precinct Properties to internalise the management of its business.

The New Zealand listed real estate investment trust (REIT) will pay NZ$215 million (AU$197 million) for 100% of the management interests. AMP Capital has a 50% interest in management company AMP Haumi Management Limited and has managed Precinct since the REIT first listed in 1997.

AMP reported it expects to receive roughly AU$80 million in profit from the deal "subject to foreign currency and other adjustments" for its 50% share. The company said Precinct will no longer pay management fees after the deal is complete, stating that impact was "not material to AMP Capital's ongoing earnings".

AMP share price snapshot

Over the past 12 months, the AMP share price is flat. That compares to a 32% gain on the ASX 200.

Year to date AMP shares are down by around 14%. AMP pays an annual dividend yield of 3.1%, 90% franked.

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