The AMP Ltd (ASX: AMP) share price is inching higher this morning. The price movement comes after the financial institution advised it will be commencing the $200 million share buy-back it first announced in August last year.
At the time of writing, shares in the company are trading at $1.0775 – up 0.23%. By comparison, the S&P/ASX 200 Index (ASX: XJO) is 0.85% higher.
Let’s take a closer look at the buy-back.
AMP buys back shares
In a statement to the ASX this morning, AMP said it will commence its share buy-back program today.
AMP will buy the shares on the market. According to the statement, the plan is subject to market conditions and “other relevant factors”. The company also reserves the right to cancel the buy-back at any time.
The Australian Securities and Investment Commission (ASIC), says an on-market buy-back does not need any prior approvals from the regulator, as long as no more than 10% of equity is purchased with 12 months, known as the 10/12 rule. Given AMP has a market capitalisation of $3.7 billion, the $200 million buy-back is well under that 10% limit.
The financial giant is funding the purchase through cash on hand. Back in August, AMP had $1.4 billion in “surplus capital” and committed to returning $544 million back to its shareholders. $344 million was paid via a special dividend at the time. The company postponed the buy-back until it was able to conduct a portfolio review, which it completed in April this year.
Investors are responding mildly positively to the buy-back finally commencing, judging by today’s AMP share price moves.
AMP share price snapshot
The AMP share price recently sank to a new 52-week low after shareholders voted to approve a merger between its Diversified Property Fund (ADPF) and another fund run by DEXUS Property Group (ASX: DXS).
In more substantial news, the financial institution announced it would demerge its asset management business and thus, abandon its plans to sell AMP Capital to Ares. As well, the group recently saw its CEO resign and be replaced by the Deputy CEO of Australia and New Zealand Banking Group Ltd (ASX: ANZ).
Over the past 12 months, the AMP share price has sunk by around 25%. It’s fallen an even greater 31% since the beginning of this year. The company’s share price is now trading below what it was during the COVID induced market sell-off in March last year.