US alternative investment manager Ares Management Corporation has agreed to buy a controlling stake in AMP Capital鈥檚 private markets business.
The joint venture proposal came after Ares abandoned its original offer to acquire the entire AMP group for around A$6.35bn (鈧�4.1bn).
The parties have agreed to form a A$2.25bn joint venture to run the Australian company鈥檚 infrastructure equity and debt, real estate and other minority investments.
Under the proposed transaction, with a 60% stake in the business, Ares will assume management control of AMP Capital. Ares will outlay equity totalling A$1.35bn for its stake, and AMP will own the remaining 40% interest in the joint venture. AMP would retain around A$900m of assets, mostly seed, sponsor and related investors.
The deal, which is subject to approvals, gives an implied value to AMP Capital鈥檚 existing private markets business of up to A$3.15bn.
鈥淲e have a lot of details to go through, and our collective teams are working towards a binding agreement over the next 30 days (of exclusivity),鈥� said Francesco De Ferrari, AMP鈥檚 chief executive officer.
鈥淭he strategic rationale,鈥� he said, 鈥渋s to pivot AMP Capital towards private markets to what we call once-in-a-lifetime opportunity that exists within these asset classes.
鈥淟ow interest, huge government intervention, and basically a lot of macro trends support these businesses,鈥� he said told journalists at a media briefing.
Ares chief executive, Michael Arougheti, said the partnership would expand Ares鈥� real estate and infrastructure investment capabilities.
鈥淲e believe we can add significant value through our global scale, relationship network, investor relationships and our broad, collaborative investment platform,鈥� said Arougheti.
The joint venture is expected to raise A$500m of debt to maximise capital efficiency. This would reduce the pro-rata equity contributions for each party in the joint venture.
Under this assumption, said the partners, Ares would fund A$1.05bn in equity to the joint venture and AMP would receive expected gross cash proceeds of up to A$1.55bn.
To read the digital edition of the latest 91传媒在线 magazine click here.
