AMP share price surges 11% as $699m Collimate deal confirmed

AMP has announced the piece of its divestment puzzle.

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Key points

  • The AMP share price is launching 11% higher today, reaching an intraday high of $1.14 
  • It comes after the financial services provider announced the final sale of its multifaceted divestment of Collimate Capital – the business previously expected to be demerged 
  • Collimate's international infrastructure equity business is to be acquired by DigitalBridge in a transaction worth up to $699 million 

The AMP Ltd (ASX: AMP) share price is taking off as the company confirmed it’s found a buyer for the last piece of its Collimate Capital business.

International digital infrastructure firm, DigitalBridge, has agreed to buy Collimate’s international infrastructure equity business. The transaction’s set to be worth up to $699 million.

At the time of writing, the AMP share price is $1.14, 10.73% higher than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) is back in the green today, gaining 0.97%. Meanwhile, AMP’s home sector – the S&P/ASX 200 Financials Index (ASX: XFJ) – is up 0.61%.

Let’s take a closer look at AMP’s latest sale agreement.

AMP share price rockets on final Collimate sale

The AMP share price is roaring higher as the company confirms the final sale of its multifaceted divestment of Collimate Capital – a business previously earmarked to be demerged.

The international infrastructure equity business boasts $9 million of assets under management.

And what a divestment it is. The final piece of the puzzle could see DigitalBridge forking out $699 million.

DigitalBridge will hand AMP an upfront cash payment of $462 million for the business.

It might also be liable to pay an estimated $57 million of retained future carry and performance fees and up to $180 million of fees contingent on future fundraisings.

The sale follows the $430 million sale of Collimate’s domestic infrastructure equity and real estate business – announced yesterday – and the $578 million sale of its infrastructure debt platform – completed in February.

The transactions suggest Collimate Capital has a value of $2.04 billion, including the value of retained assets. That figure jumps to $2.52 billion when including the maximum earnouts.

Though, AMP doesn’t expect to receive the full earnout for either of the sales announced this week.

AMP plans to give most of the funds raised through the sales to shareholders through a capital return. It will also use some of the cash to pay down some of its debt.

The sale of Collimate’s international infrastructure debt and equity platforms and its real estate and domestic infrastructure equity business is expected to bring AMP a combined net capital increase of approximately $1.1 billion.

The company expects that the incremental transaction and separation costs to sell the 2 Collimate Capital businesses will be approximately $20 million, post-tax.

What did management say?

AMP CEO, Alexis George commented on the news driving the company’s share price higher today, saying:

These sales realise significant value for shareholders and deliver certainty for clients and for our people.

In DigitalBridge and Dexus Property Group (ASX: DXS) we are confident we have found the right owners for both businesses … We expect both will add significant value through their scale, capability, and depth of talent, which our teams will complement.

Post completion of the two sales, AMP Limited will be a more focused entity, concentrated on driving our core banking and retail wealth businesses in Australia and New Zealand, with a core objective of accelerating our strategy and increasing our competitiveness.

AMP share price snapshot

Today’s gains have helped boost the AMP share price further into the long-term green.

Right now, the financial services company’s stock is trading 14% higher than it was at the start of 2022.

It has also gained 3% since this time last year.

Motley Fool contributor Brooke Cooper 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.

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