AMP has confirmed Boe Pahari will leave the business as it pursues a demerger of its Private Markets business, after plans to sell to Ares Management fell through.
AMP will demerge its $50 billion Private Markets business from AMP Limited and list it separately on the ASX, confirming discussions with Ares yielded no outcome; "we have not been able to reach an agreement that would deliver appropriate value for our shareholders".
As part of the demerger, former AMP Capital chief executive Boe Pahari will leave the business. Pahari currently serves as AMP Capital's global head of infrastructure equity and North West region. AMP said he will work closely with the infrastructure equity team to ensure a smooth transition.
Pahari's departure comes some months after he was removed as chief executive of AMP Capital following revelations of serious sexual harassment allegations.
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AMP said it will commence the internal separation of Private Markets immediately, including establishing operational independence for management, new branding and a board of directors, to be led in the interim by current AMP Capital chair Michael Sammells. An independent search for a chief executive is underway with David Atkin currently leading the business on an operational basis.
AMP said the demerger will see the creation of "two more focused businesses, better equipped to pursue and allocate capital to distinct growth opportunities, and realise efficiencies".
Those businesses would be AMP Limited, offering retail-focused wealth management, investment and banking services to the Australian and New Zealand markets, and Private Markets offering investment services across infrastructure equity, infrastructure debt and real estate. AMP Limited will own a 20% stake in Private Markets.
"The proposed demerger would unlock further value in the Private Markets business by simplifying its structure, providing operational independence and enabling it to establish a new brand. Private Markets will also put in place a new management equity plan, to attract and retain talented investment professionals and management," AMP said.
Commenting, AMP chair Deborah Hazelton said the portfolio review confirmed AMP had two distinct businesses with different client bases and growth opportunities.
"The Private Markets business operates in growing, global markets in which investment management talent and strong client relationships are critical. While AMP Australia and New Zealand Wealth Management share the same commitment to clients, they are predominantly domestic businesses focused on wealth, banking and investment solutions for retail customers," she said.
After the discussions with Ares failed, Hazelton said the board concluded a demerger would provide investors with the strongest value outcome.
Existing AMP shareholders are set to receive shares in Private Markets proportional to their existing holdings in AMP Limited, the company said, after taking into account any shares to be retained by AMP. The share buyback of up to $200 million will restart now that the portfolio review has completed, AMP said.
The demerger is subject to various approvals, with further details regarding capital structure, dividend policy, separation, management and governance still to come.
Under the demerger, AMP Limited will retain AMP Capital's Global Equity and Fixed Income business for which it continues to explore options, and the Multi-Asset Group which is in the process of being transferred to AMP Australia.
The news comes after the sudden resignation of Francesco De Ferrari as chief executive of AMP Limited. He is set to be replaced by Alexis George in Q3 of this year.