Could AMP Ltd (ASX: AMP) shareholders be heading for a $1 billion payday?
Maybe, according to analysts at broker Ord Minnett.
They noted that following major asset sales in FY22, AMP shareholders could benefit from buybacks after the financial services company has paid down debt.
A billion dollars in capital returns?
In April this year, AMP shares got a big lift when the company sold its funds management branch, formerly AMP Capital and rebranded to Collimate Capital.
Collimate was divested in two parts.
International digital infrastructure firm DigitalBridge acquired Collimate's international infrastructure equity business for some $699 million.
In turn, Dexus Property Group (ASX: DXS) acquired Collimate's real estate funds management and domestic infrastructure equity businesses.
As the Motley Fool reported at the time, the combined sales were expected to bring AMP a net capital increase of around $1.1 billion.
The company stated it intended to return most of the funds to shareholders through a capital return as well as pay down some of its debt.
Commenting on the logic behind the divestments, AMP CEO Alexis George said:
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.
Analysts at Ord Minnett (as reported by The Australian) estimate that REA will use around $400 million of the $1.8 billion it garnered from asset sales to pay down its debt. That leaves the lion's share of the funds available for capital returns through a share buyback.
Ord Minnett estimated AMP will have a net tangible asset value of $1.35 per share after the recent asset sales. It's currently trading for $1.17 per share.
How have AMP shares been tracking?
After a difficult few years, AMP shares have outperformed the benchmark this past year.
Over the past 12 months, the AMP share price is up 9% compared to a 7% loss posted by the S&P/ASX 200 Index (ASX: XJO).
