Watchers of the AMP Ltd (ASX: AMP) share price will likely be gearing up for the release of the company's full year results tomorrow.
However, on the eve of their release, reports have emerged claiming investors in its $7 billion office fund – the crowning jewel of soon-to-be-demerged AMP Capital – are considering withdrawing from the fund.
At the time of writing, the AMP share price is $1, 3.83% higher than its previous close.
For context, the S&P/ASX 200 Index (ASX: XJO) is currently up 0.3%. Meanwhile, the All Ordinaries Index (ASX: XAO) has gained 0.2%.
Let's take a closer look at the drama that could be unfolding within AMP's newly re-secured AMP Capital Wholesale Office Fund (AWOF).
Is the 'crown jewel' of AMP's demerger still in danger?
According to the Australian Financial Review (AFR), a letter written by AWOF investors cites concerns that the fund's managers could have conflicted interests.
A recent review resulted in the fund's trustee board finding that AMP is the best entity to manage AWOF.
However, it seems the finding hasn't eased the concerns of institutional investors – the same investors reportedly responsible for the review.
The AFR has previously reported that the fund's trustee board is comprised of 3 AMP executives. They were advised by an independent advisory committee during the review process.
But according to today's reporting, the fund's investors are irked by the trustee board's makeup and concerned it will be incentivised by AMP's successful demerger.
The AMP share price gained 2.9% when it released its latest update on its demerger plans.
If all goes to plan, they will see AMP Limited split from AMP Capital's Private Markets business, referred to as 'Private Markets Co'.
The demerger is expected to go ahead during the current half.
The AFR quoted AWOF's investors' letter:
There is a concern that the trustee has prioritised the interest of its shareholders ahead of the interest of AWOF's investors.
We are concerned this leads to a very clear conflict with their ability to independently assess whether an AMP entity, or another manager, should retain the management mandate for AWOF and make a recommendation to investors.
The retention of the management rights of AWOF has clear and direct benefit to Private Markets Co and therefore the directors personally via their participation in the incentive arrangements.
AWOF's investors' concerns follow AMP Capital's loss of the $5 billion AMP Capital Diversified Property Fund last year.
AMP share price snapshot
2022 has seen the AMP share price outperforming the market.
It has gained 0.2% year to date while the ASX 200 has slipped 4.5%.
However, AMP's stock is still trading for 34.5% less than it was this time last year.
