Here's why the AMP (ASX:AMP) share price is racing 6% higher today

What did the company announce? Here are the details

| More on:
Man in an office celebrates at he crosses a finish line before his colleagues.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

sdf

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.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Financial Shares

A young boy wearing a hat, sunnies and striped singlet looks fierce and flexes his arm in victory.
Small Cap Shares

Forget CBA shares. What about small-cap ASX financial shares?

Analysts discuss 2 small-cap ASX financial shares that are up by more than 40% in 2025.

Read more »

Shot of a young businesswoman looking stressed out while working in an office.
Financial Shares

Challenger shares fall on big APRA news

Let's see what is weighing on this stock on Friday.

Read more »

Buy and sell written on silver cubes on a stock market chart.
Broker Notes

2 buys and 2 sells in the ASX 200 financials sector: analysts

We reveal what the experts think of these ASX 200 financial shares.

Read more »

Man smiling at a laptop because of a rising share price.
Financial Shares

Macquarie tips around 40% upside for GQG Partners shares

This stock could deliver big returns.

Read more »

Three happy office workers cheer as they read about good financial news on a laptop.
Financial Shares

Macquarie tips 17% return for this ASX 200 stock

The broker is feeling bullish about this stock. Let's find out why.

Read more »

A female financial services professional with a manicured black afro hairstyle turns an ipad screen to show a client across the table a set of ASX shares figures in graph format.
Share Market News

Record CBA share price and blockbuster merger push ASX 200 financials sector to the top

ASX financial stocks led the 11 market sectors last week with a 1.95% gain.

Read more »

Man with rocket wings which have flames coming out of them.
Financial Shares

Up more than 900% in 5 years, can this ASX All Ords financials stock go higher?

The share price of this company has left others behind in the dust.

Read more »

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.
Financial Shares

HMC Capital shares are down 50% in 2025, can they turn around?

HMC Capital shares have plunged more than 50% this year, but with solid investments in energy, private credit, and data…

Read more »