The AMP Ltd (ASX: AMP) share price is on the rise this morning. This comes amid the financial services company announcing a divestment from its private markets business, PrivateMarketsCo.
At the time of writing, AMP shares are fetching 99.5 cents apiece, up 5.85%. This means its shares have now leaped almost 10% higher in the past week.
PrivateMarketsCo sells infrastructure debt platform
Investors are driving up the AMP share price following the company’s latest statement to the ASX today.
In its release, AMP advised that PrivateMarketsCo entered into a binding agreement to sell its infrastructure debt platform to Ares Holdings LP, a subsidiary of Ares Management Corporation (NYSE: ARES).
The agreement follows PrivateMarketsCo’s strategic decision to focus on managing equity investments in real estate and infrastructure. In addition, this will simplify the business structure and enable the company to fuel growth from the transaction.
In total, Ares Holdings will pay PrivateMarketsCo a total cash consideration of $428 million for the infrastructure debt platform.
An incentivised $150 million of sponsor investments and rights to carried interest in closed infrastructure debt funds is available. This is provided performance hurdles are met by their due date.
The cash proceeds from the sale will be used to strengthen the capital position of the AMP group.
Separation of the balance sheet and allocations of surplus capital between AMP Limited and PrivateMarketsCo is continuing as part of the demerger preparations.
The demerger remains on track to complete late in the first half of 2022.
Commenting on the news driving the AMP share price, PrivateMarketsCo chief executive Shawn Johnson said:
This transaction provides strong outcomes for both our Infrastructure Debt clients and our shareholders. Infrastructure Debt will further accelerate its growth as part of Ares’ global alternative investment platform, benefitting the clients who have supported it through its early stages under our ownership.
PrivateMarketsCo and AMP will realise significant value from the divestment, as well as retaining our valuable sponsor investments and carried interest in the closed Infrastructure Debt funds. This will provide a strong revenue stream in coming years as we demerge PrivateMarketsCo and accelerate the momentum in our business.
AMP share price snapshot
Over the last 12 months, the AMP share price has tracked almost 40% lower, with year-to-date down by more than 35%. The company’s shares hit a multi-decade low of 88.5 cents in September 2021, before moving in circles.
In contrast, the S&P/ASX 200 Financials Index (ASX: XFJ) has gained 18% from this time last year and is up 20% year-to-date. The sector also registered a 52-week high of 6,956.4 points in late October.
Undoubtedly, AMP shares are lagging behind the Financial Index which has continued to accelerate since March 2020.
Based on today’s price, AMP commands a market capitalisation of roughly $3.27 billion, with approximately 3.27 billion shares on issue.
