* AMP hires Goldman Sachs, Credit Suisse to run asset review
* Company may sell some or all of its business - analysts
* Buyout may value AMP around A$6 bln - analysts
* Shares up 7%
SYDNEY, Sept 2 (Reuters) - Australian financial planning
giant AMP Ltd said on Wednesday it was putting all its
assets under review, setting in motion a potential sale or
break-up of a company that has seen its profit and reputation
weakened by years of scandals.
The veteran manager of Australian retirement savings said it
had hired investment banks Credit Suisse and Goldman Sachs to
review all its business units after "an increase in interest and
inquiries", without saying from where.
Just two days earlier, the more than 160-year-old company
was overtaken as the country's biggest wealth advisor network
when rival IOOF Ltd said it was buying MLC, the advice
arm of National Australia Bank Ltd.
"We have taken a decisive step to undertake a portfolio
review to ensure we appropriately assess all options to maximise
shareholder value," AMP Chair Debra Hazelton said in a
A sale or break-up could mean the end of a household name in
Australian retail finance which manages some A$219 billion ($161
billion) in retirement savings and as a fund manager, according
to a July trading update.
AMP's reputation plummeted after a public inquiry into the
financial sector exposed systemic wrongdoing such as the
charging of fees for no service, leading to the exit of its
chair and CEO in 2018.
It has failed to put those scandals to bed and only last
week it lost another chairman over its handling of an employee
Through it all, AMP has seen its funds under management
shrink as clients abandoned ship and, more recently, the
coronavirus crisis wreaked havoc on the markets. A stimulus
measure to let people draw down their pensions before retirement
has further eroded its funds under management.
"They are saying that they're reassessing things in light of
some approaches and I'd expect any board to do that," said Simon
Mawhinney, chief investment officer at Allan Gray, which holds
6.6% of AMP stock.
Goldman Sachs declined to comment, while a Credit Suisse
representative was not immediately available for comment.
"SHAKE OUT SOME INTEREST"
One of Australia's biggest listings when it undertook an
Initial Public Offering in 1998, AMP has seen its market
capitalisation shrink to as little as A$3.7 billion this year as
it sells assets and as investors, many of them former customers
who automatically received shares upon listing, distance
themselves from the negative headlines.
Before Wednesday's announcement, shares of AMP were trading
up to one-fifth below their value based on a standard method of
adding up the individual assets, said analysts at JPMorgan in a
research note. A buyout of the whole business may see the
company valued closer to its true value of about A$6 billion,
AMP shares were up as much as 7% by mid-session, against a
broader market gain of 1.6%, as investors bet on the
likelihood of a transaction.
"They're probably trying to get an offer for their financial
planning business," said Hugh Dive, chief investment officer at
Atlas Funds Management.
"They saw what happened with IOOF and MLC and they're hoping
to shake out some interest."
Dive did not expect AMP to push for a sale of its wealth
management division, AMP Capital, which he said was seen as "the
jewel in their crown, the only part of the business that's
An investment banker who asked not to be named said AMP's
main business units - wealth management, funds management and
banking - were closely integrated so a break-up may be
Like much of the Australian finance sector, AMP has been
selling assets to simplify and minimise regulatory headaches. It
sold its life insurance unit this year, although it scrapped
plans to offload its New Zealand wealth management arm.
($1 = 1.3605 Australian dollars)
(Reporting by Byron Kaye and Paulina Duran in Sydney and Rashmi
Ashok in Bengaluru; Editing by Stephen Coates)