Debra Hazelton

AMP Limited has announced its intention to pursue a demerger of AMP Capital’s private markets business (“Private Markets”) of infrastructure equity, infrastructure debt and real estate.

The proposed demerger follows a decision by the AMP Board to conclude discussions with Ares Management Corporation regarding a potential sale of Private Markets.

The demerger would create two more focused businesses, better equipped to pursue and allocate capital to distinct growth opportunities, and realise efficiencies:

• AMP Limited: a retail-focused, wealth management, investment and banking group with scale and market-leading positions in the Australian and New Zealand markets and strategic investments in key international partnerships. AMP Limited will also retain:
  • A minority stake in Private Markets of up to 20 per cent to participate in the future growth of the business
  • AMP Capital’s Global Equity and Fixed Income (GEFI) business, for which AMP is currently exploring sale or partnership options; and
  • AMP Capital’s Multi-Asset Group, which is in the process of being transferred to the AMP Australia business
• Private Markets: a leading global private markets investment manager with a strong performance track record in differentiated asset classes of infrastructure equity, infrastructure debt and real estate, and capabilities to expand into attractive growth adjacencies.

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.

The targeted timeline is for the demerger to be completed in 1H 22.

Leadership

As previously announced, Alexis George will be the CEO of AMP Limited and will be joining AMP in Q3 21.

An international search process for a new CEO to lead Private Markets is already underway, with David Atkin continuing to lead the business on an operational basis.

As part of the separation of Private Markets, AMP Capital’s Global Head of Infrastructure Equity and North West Region, Boe Pahari, has decided to leave the business. Mr Pahari will work closely with the Infrastructure Equity leadership team to ensure a smooth transition.

AMP Chair Debra Hazelton commented: “Our portfolio review confirmed that AMP has two distinct businesses in retail wealth and institutional private markets, with different client bases and growth opportunities. From the extensive work that has been done we believe that operational and structural separation will significantly benefit both business units. 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.

“Through our review, we assessed the alternatives of a sale or separation for Private Markets and found both options would support the acceleration of growth in the business. We have had substantial and constructive discussions with Ares regarding a sale, however, we have not been able to reach an agreement that would deliver appropriate value for our shareholders. The Board has therefore concluded a demerger provides investors with the strongest value outcome, creating two more focused entities, with the agility to pursue new growth opportunities in their respective markets. We will now accelerate our demerger planning, building on the preliminary work already undertaken.”

Next steps

AMP will commence the internal separation of Private Markets immediately, including establishing operational independence for management, new branding and a Private Markets Board of Directors. Michael Sammells will be appointed as interim Chairman of the Private Markets Board. Mr Sammells, a non-executive director of AMP Limited and current Chairman of AMP Capital, has extensive experience with private equity and preparing a company for an ASX listing.

On demerger, existing AMP shareholders would receive shares in Private Markets proportional to their existing shareholdings in AMP Limited, after taking into account any shares to be retained by AMP. Under the proposed demerger, Private Markets is expected to be listed on the ASX.

A demerger would be subject to final AMP Board approval, required regulatory approvals, applicable consents and approval from AMP’s shareholders. Further details regarding capital structure, dividend policy, separation, management and governance will also be announced in due course.

Having concluded the portfolio review the Board will restart the share buy-back of up to A$200 million.

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Kylie O’Connor

AMP Capital has announced Kylie O’Connor has been promoted to lead its real estate business and will join the leadership group.  Ms O’Connor is currently AMP Capital Real Estate’s Chief Operating Officer and Managing Director of Separate Accounts and will replace Carmel Hourigan who is leaving the business.

As Head of Real Estate, Ms O’Connor will lead the team managing more than A$28 billion of commercial real estate on behalf of institutional and retail investors across equity and debt investment solutions.  This includes the management of AMP Capital’s integrated fund, investment, development and property management platform, as well as its strategic global partnerships.

AMP Capital CEO Boe Pahari said: “I am delighted to appoint Kylie O’Connor to lead our real estate business, recognised as one of the largest and most experienced wholesale property managers in the Asia Pacific, and key to our real assets strategy.  Kylie is a great leader and her promotion is testament to the strong talent within AMP Capital’s real estate team.  Highly regarded by our clients, our team and within the industry, she’s ready to lead the next phase of growth for our real estate business.

“Kylie has a deep breadth of both commercial and real estate investment experience and will bring a strong focus on delivering investment outcomes for our clients. I also value her contribution to the wide and diverse views in the leadership group.”

Ms O’Connor joined AMP Capital in 2015 as Fund Manager for AMP Capital Diversified Property Fund, before taking on the role of COO in 2018.  She has 25 years’ experience in property funds management and has been involved in the delivery of several large development projects on behalf of wholesale investors.  Prior to AMP Capital, she held a number of senior fund management, audit and advisory roles at Lendlease and Arthur Andersen.

Ms O’Connor said: “I’m pleased to be appointed to lead this first-class real estate business and join Boe’s leadership team.  With over 60 years’ heritage in managing iconic real estate for local and global investors, we have an excellent foundation of depth of talent, premium assets and great client relationships on which to grow the business.

“While COVID 19 has created challenges for the industry, we’re constantly engaging with tenants, customers and investors to find the right outcome, and I’m confident in our ability to deliver for our clients, our people and our shareholders.”

Also announced yesterday, Luke Briscoe will take on the role as Chief Operating Officer, Real Estate, reporting to Ms O’Connor, where he will oversee the operations of the business while seeking opportunities to enhance the real estate platform.  Mr Briscoe held the position of Managing Director, Office & Logistics for the past five years and as Chief Operating Officer will also lead its circa $10 billion separate accounts business.

Ms O’Connor added: “I am proud of the high calibre of talent in our real estate business and look forward to continuing to work closely with Luke and the rest of the Real Estate leadership team who are united in our commitment to lead the business into its next chapter of growth.”

Ms O’Connor will report to Boe Pahari and join AMP Capital’s leadership group effective immediately.

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The appointments expand the leadership group to reflect AMP Capital’s strategy to grow in the world’s largest asset management markets and ensure both clients and investment expertise are represented.

AMP Capital CEO Boe Pahari said: “AMP Capital’s success will be determined by our global representation, client centricity and strong heritage and foundation, and the appointments we have made today reflect that. We are building a client-led, globally integrated investment platform to further increase access to global capital and drive collaboration across our teams to deliver better outcomes for clients.

“We are drawing on the talents within our business and seeking to bring a diversity of views to the leadership group. This group will develop and execute AMP Capital’s new strategy. I’m excited by what we will achieve together, as we continue to export our investment excellence to a global market, particularly in real assets.”

Summary of the changes:

• Patrick Trears has been appointed Global Head of Infrastructure Debt, based in the US. The appointment reflects the importance of North America in infrastructure debt, which is one of our largest markets for current and potential clients and deal opportunities. Patrick, who is currently Head of Infrastructure Debt in the US, will succeed Andrew Jones, who will now leave AMP Capital.
• Tim Smith has been appointed Head of International Distribution. Currently head of American and European distribution, Tim will be elevated to the leadership group.
• Aideen O’Donovan has been appointed Chief Financial Officer, replacing Adrian Williams, who is stepping down from his role as the Acting Chief Financial Officer and Chief Operating Officer (COO) for personal reasons. Aideen is currently Head of Finance and will join the leadership group.
• Simon Joiner has been appointed Chief Operating Officer, picking up Adrian Williams’ COO duties. Simon is currently COO in the North West region and will expand his remit and join the leadership group. Adrian will take on the role of Global Transition Manager to oversee the separation of the functions until the end of the year.
• Simon Ellis, currently Partner, Infrastructure Equity has been appointed as Head of Americas. Partners Infrastructure Equity, Matt Evans and Ruben Bhagobati have been appointed Co-Heads of Europe. These three new roles in key international markets will look to drive growth across their respective regions, beyond their own investment capability roles.
• After five successful years of building the Real Estate business, Carmel Hourigan has decided to leave AMP Capital to take up a new role at Charter Hall. A process to replace Carmel has already commenced and Carmel will remain in the role to manage an orderly handover of responsibilities.
• With Madeleine Mac Mahon’s decision to resign after 12 years with the business, Lisa Hurley and Lauren Crystal, currently AMP Capital People & Culture Business Partners, have been appointed Co-Heads of People & Culture. Lisa and Lauren will be members of the leadership group.

There are no changes to the roles of: Managing Director Asia Pacific, Craig Keary; Global Head of Public Markets, Simon Warner; General Counsel, Yen Hui Tie; and Chief Risk Officer, Natalie Kooyman, who will all remain members of the leadership group.

Mr Pahari said: “I’d like to thank Madeleine and Adrian for the important role they have played in the development of AMP Capital. Andrew has done an outstanding job to build our infrastructure debt business, particularly the success of the IDF series. They each leave with our best wishes. I’d also like to congratulate Carmel on her new role and wish her every success for her new challenge.

“Pleasingly we’re able to take advantage of the deep pools of internal talent, and combined with our established leadership group, we will continue to build upon our culture underpinned by performance, excellence and inclusion.”

The leadership group announced today will develop and deliver AMP Capital’s strategy, to be announced at AMP’s Half Year results on 13 August 2020.

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Mr Pahari will succeed Adam Tindall who will retire from AMP after almost five years leading AMP Capital. During his time as CEO, AMP Capital has grown assets under management by approximately A$43 billion^[1]  and increased the operating earnings of the business by more than 43 per cent^[2].

Mr Pahari is currently AMP Capital’s Global Head of Infrastructure Equity and Director, North-West Region (UK, Europe and the Americas).

He joined AMP Capital in 2010 and has led the development and global expansion of the Infrastructure Equity business, which at FY 2019 had A$23 billion in assets under management, and has been a key driver in AMP Capital’s growth over the past five years. As part of his wider responsibilities as AMP Capital CEO, Mr Pahari will continue to oversee the Infrastructure Equity business.

Mr Tindall will work with Mr Pahari through a transition period to ensure an orderly handover.

AMP Chief Executive Francesco De Ferrari commented: “AMP Capital operates in globally competitive markets in which scale and differentiated capabilities have become fundamental. With Adam’s decision to retire, we have sought to appoint a leader with a global view and track record for growth. Boe has led the international expansion of our Infrastructure Equity business over the past six years, demonstrating his capability and strategic acumen. As incoming CEO, Boe’s mandate will be to continue to grow the business, capitalising on its strengths and the opportunities in infrastructure and real assets.

“I would like to thank Adam for his dedicated and thoughtful leadership of AMP Capital over the past five years. AMP Capital has continued its growth under his watch, and he leaves with our best wishes.”

Boe Pahari, incoming AMP Capital CEO commented: “I’m honoured to have been appointed as CEO of AMP Capital and to be entrusted with the task of leading its continued growth. We have substantial scope to expand globally, further leveraging our strengths, particularly in infrastructure and real assets. I’m firmly focused on ensuring AMP Capital maintains the unwavering commitment to clients it has had under Adam’s leadership, and continues to adapt to deliver the investment capabilities they need. I’m looking forward to getting started.”

———

[1] AMP Capital total AUM from FY15-FY19
[2] AMP Capital operating profit from FY15-FY19

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Boe Pahari

AMP Capital announces the close of Global Infrastructure Fund II (GIF II) at US$3.4bn. The fund reached final close on 27 December 2019, exceeding its US$3bn target and drawing additional significant co-investment commitments.

GIF II attracted global interest, with commitments from more than 60 institutional clients from across the globe, including Japan, Singapore and Australia; the United Kingdom, Spain, Germany, Switzerland, Denmark and Finland; Saudi Arabia, Kuwait and the United Arab Emirates; the United States and Canada. These investors include public and corporate pension funds, fund of funds, insurance companies, family offices and sovereign wealth funds.

Boe Pahari, Global Head of Infrastructure Equity at AMP Capital, commented: “This landmark close for GIF II is a significant step in the global growth of our infrastructure business, and our investments to date show we’re delivering on our broader strategy of delivering growth through real assets.

“Our approach brings private equity-style rigour to infrastructure investing, influencing and delivering on business performance, and ensuring the provision of high-quality essential services with our strong heritage in ESG and responsible investment.”

GIF II seeks to deploy capital across the four sectors best positioned to benefit from the evolution of infrastructure in the current market environment: transport, communications, infrastructure health and energy. To date the fund has transacted across all four of these target sectors, securing five high quality, diversified businesses with growth potential, at compelling valuations.

In the United Kingdom, GIF II has invested in London Luton Airport, the fifth largest airport in the UK serving the fast-growing London market, and Achieve Together, the third largest specialist care provider in the UK with more than 350 services and 2,300 beds, which was created from the merger of two of the highest-quality businesses in the UK care sector, the Regard Group and Care Management Group.

In the United States, GIF II’s current assets are Everstream, a leading Midwest fiber provider; Invenergy AMPCI Thermal Power, a joint venture investing in a gas-fired power generation portfolio to support the energy transition in multiple power markets in the US, Canada and Mexico; and Expedient, a provider of cloud computing and data center services operating across eight markets.

AMP Capital’s global infrastructure equity strategy team comprises 48 investment professionals based in offices in Europe, the United States and Asia Pacific and 13 senior advisers.

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Thomas Preising

AMP Capital has appointed Thomas Preising as a senior adviser to its infrastructure equity business, as it embraces technological innovation and seeks to harness infotech to streamline and enhance the operations of its global infrastructure assets.

Mr Preising was most recently the Global Business Operations Director for Apple, based in Cupertino, US. He had joined Apple in 2004 as the Operations Director for Apple Europe, before moving to Delhi as the Sales Director of Apple India. In other roles at Apple, he established its first office in the Middle East and led sales operations and planning for its Latin America business. Before joining Apple, Mr Preising had worked at Hewlett Packard for a decade. He began his career in infrastructure, working at US rail business Conrail and as an infrastructure Project Associate at McKinsey.

Mr Preising joins AMP Capital’s team of fifteen senior advisers which represent leading industry talent from across infrastructure sectors. The advisers provide insights to AMP Capital’s investment team and asset management team, a dedicated global team which oversees the operation and development of AMP Capital’s infrastructure assets. The asset management team work with the senior advisers to ensure the sustainability and long-term profitability of AMP Capital’s infrastructure investments.

Based in Delhi, Mr Preising will bring his extensive experience of large-scale and efficient business operations in varied market environments, as well as his deep understanding of the tech industry and its growth.

Boe Pahari, Global Head of Infrastructure Equity, said: “Tom’s unique career and experiences will be a great resource for our teams, and his appointment reflects AMP Capital’s aim to be a global destination for talent. We are proud of our senior advisers, who bring exceptional talent and experience from diverse backgrounds to enhance our asset management capability, and we are particularly excited to look beyond the traditional boundaries of infrastructure and learn from a professional with experience of building one of the world’s most successful brands.

“The growth of technology in our lives has fundamentally changed the infrastructure landscape and this is reflected in our investments in towers, broadband, and looking forward, data centres. Infrastructure businesses across all sectors have much to learn from the technology industry. In recent years we have invested in improving technology at our assets to improve their efficiency and reliability. Infrastructure assets – particularly those with complex businesses, such as airports – will benefit from harnessing technological advances to serve them.

“While Tom will be working with us on global projects, we are delighted that his base will be our Delhi office. India is a growth market for us in 2019, offering interesting opportunities for global infrastructure investors in sectors such as telecommunications and infrastructure health, and Tom’s local market insights and business acumen make him a fantastic addition to our India team.”

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The new function will oversee direct investments made alongside AMP Capital’s infrastructure equity funds, including consortium management, negotiation and pricing, deal syndications, fund co-investments and separate accounts, focussing on delivering attractive investment solutions and supporting investors to achieve their goals.

AMP Capital has appointed Dylan Foo as Global Head of Direct Investments, to oversee the new global function as it grows this strategic pillar of its business. Mr Foo is currently Partner and Head of Infrastructure Equity, Americas, overseeing origination, execution and asset management of infrastructure investments in the region. He will continue in his existing role, supported by the Americas team across offices in New York, Chicago and Orange County, in addition to his new responsibilities.

Patsy Sandys, an Associate Director on the Infrastructure Equity team in London, will lead the Direct Investments desk in Europe, reporting to Mr Foo.

Commenting on the appointments, Boe Pahari, Global Head of Infrastructure Equity, AMP Capital said: “We are focussed on delivering excellent client service, providing solutions, and embracing innovation in the evolving infrastructure investment landscape. As talented investment professionals, Dylan and Patsy are well positioned to find and develop the right opportunities for our larger institutional clients who are keen to add direct infrastructure investments to their portfolios.

“Infrastructure offers investment characteristics that are attractive to most institutional investors – predictable cashflows, attractive yields, defensive characteristics, long investment periods and liability-matching potential. It is therefore of little surprise that institutions are growing their allocations to infrastructure and increasingly seeking to benefit directly from the performance of assets that suit their investment strategy.

“As demand for the asset class continues to grow, the competitive market has pushed up prices and is compressing yields, so investing selectively is crucial. Making prudent investments and ensuring the sustainability and profitability of infrastructure assets requires specialist sector expertise, origination skills and active management, and we see investment managers who have demonstrated these strengths increasingly partnering with institutional investors in direct investments.

“Having established ourselves as a global mid-market sector specialist, supported by a number of landmark deals across multiple geographies, we understand how important it is for our large clients to increase their access to these opportunities, and their desire to partner with us is testament to the confidence in our investment strategy, our team, and our track record.”

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Adam Tindall

AMP Capital has opened a new representative office  in Dubai and appointed an Institutional Director, Sudhanshu Garg, who will be  responsible for introducing AMP Capital’s real assets capabilities to clients across the Gulf Cooperation Council (GCC).

AMP Capital CEO Adam Tindall; Boe Pahari, Director,  North West Region at AMP Capital; Andrew Jones, AMP Capital Global Head of  Infrastructure Debt; and Mr Garg officially opened the new office at a launch event in Dubai attended by clients and prospective investors.

The office is located within the Dubai  International Financial Centre Authority (DIFC), the financial services hub for the Middle East, which offers companies unparalleled access to the broader  region.

Mr Pahari said: “As AMP Capital continues its  global expansion strategy, it makes sense to have an on-the-ground presence in  Dubai, which is the gateway to the Middle East and a potential high-growth market for us.

“AMP Capital has built strong relationships with clients in the GCC over many years and the appointment of Sudhanshu, with his  strong financial services experience and excellent local networks, provides us the opportunity to further cement our presence in this important and  fast-growing region.”

Middle East institutional investors were among the clients who committed money to AMP Capital’s Infrastructure Debt Fund III, which  reached final close in August 2017 after exceeding its US$2.5 billion hard cap and attracting a further US $1.6 billion in commitments. The fundraise is believed to be one of the largest in the world for an infrastructure debt strategy.

Mr Garg has more than 23 years’ experience across a broad range of banking and financial services roles. He has held senior management roles at ABN Amro in Dubai and later as a Senior Vice President at Royal Bank of Scotland where he was Head of Financial Institutional business for the Middle East.  Most recently he was managing a consultancy business in Dubai where he was instrumental in advising on various investment product development, product structuring and managing key external relationships on behalf of the business.

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The Global Infrastructure Fund raised nearly US$400 million cumulatively for its  second and third closes. The investor commitments combined with the global infrastructure platform’s existing  portfolio of diversified European infrastructure equity assets mean the  platform is more than three quarters towards meeting its target.

AMP Capital Global Infrastructure Fund Managing Partner Boe Pahari said: “Investors  have come to understand the many benefits that infrastructure provides to a  portfolio such as low volatility, high yield, GDP and inflation linkage, and  low correlation with equities, and we continue to be encouraged by the increasing  demand for AMP Capital’s global infrastructure platform. We believe this serves as a fantastic  endorsement of AMP Capital’s capabilities, the existing portfolio and our  compelling global offering.

“Our  recent success in fundraising and deal activity, notably the Angel Trains,  ESVAGT and Adven transactions in 2015, reinforces the team’s enthusiasm and  focus to source compelling investment opportunities and generate further value  for our global infrastructure investors.”

AMP  Capital CEO International Anthony Fasso added: “We are delighted the global  infrastructure platform continues to attract such interest from institutional  investors around the world. We are  especially pleased the offering is resonating with both new clients and existing investors. New clients have  come from Japan, the Middle East, Denmark, Finland, Spain, Switzerland, Canada and the US.”

The  global infrastructure platform was launched in October 2014 when AMP Capital  converted its successful Strategic Infrastructure Trust of Europe from an open-ended to a closed-ended European fund, and launched the Global Infrastructure Fund.

The  platform’s investment mandate is to focus on mature, brownfield assets that  hold monopolies or long-term contracted revenues in sectors offering the best  relative value such as transport,energy, communication and utilities.

AMP Capital’s Infrastructure Equity business is run by an experienced team of more than 60 infrastructure professionals located in Sydney, London, New York and New Delhi.

– See more at: http://media.amp.com.au/phoenix.zhtml?c=219073&p=irol-newsArticle&ID=2142496#sthash.L9cTe10N.dpuf

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Tim Humphreys

Tim Humphreys said “Next year is shaping up  to be an interesting time for financial markets as the post-Global Financial  Crisis bull market faces a key test: dealing with the US Federal Reserve’s rate  decisions. Some people believe low short-term interest rates have been positive  for financial markets and higher rates will therefore be negative. But markets are  not this simple and as long-term investors we are more focused on the long-term  borrowing cost and cost of capital.

“Much focus has been on the changes in the global oil market and the ‘lower for  longer’ crude oil environment, but our view is that we are in a ‘lower for  longer’ yield environment globally and despite an inevitable first rate hike,  we think the Fed will be cautious not to go too far as the rest of the world is  still weak.  Our view is that the strong  demand that we’ve experienced over the past decade for real assets that offer  high and sustainable yields will continue in 2016.”

Key trends for 2016: direct real estate

AMP Capital Global Head of  Property, Carmel Hourigan said: “Unlisted commercial property still provides  a very compelling investment proposition, particularly in Australia.   While cap rates continue to compress to historically low levels, Australian  real estate remains relatively attractive compared to other global markets and  asset classes and the income return alone is very compelling. Capital markets  will continue to be the most significant driver of investment performance  during the next 12 months.  Demand (particularly from offshore investors)  for high-quality Australian real estate is insatiable.  The fall in the  Australian dollar has only served to make Australian real estate more  attractive. The big differentiator to the last cycle is the fact that it’s  generally equity, not debt, driving pricing.  However, high quality real  estate is in limited supply and hence landmark’portfolio’ transactions are  commanding a lot of interest with a lot of domestic players priced out of the  race.  With major institutional investors from Japan, China and Norway yet  to put a toe in the water in Australia, we expect capital markets to remain  deep for some time yet.

“Double-digit  returns from unlisted core funds are likely to continue for a little longer but  funds need to be positioned for the next downturn.  We have been divesting  non-core assets to ensure portfolios are defensively positioned both in terms  of asset quality and location. Going into 2016, we have a strong bias to Sydney  and Melbourne office, and high quality regional shopping centres.”

Key trends for 2016: listed real estate

AMP Capital Deputy Head of  Global Listed Real Estate James Maydew said: “Europe is extremely  attractive; it’s in the early phases of significant monetary stimulus. Hard  assets with contractual income are well positioned to benefit from this and  listed real estate fits that criteria.  We  see great opportunity in certain core German cities – due to strong  urbanisation, immigration and net household formation – and Spanish office. We  expect certain Spanish markets to have some of the fastest growing rents in the  world over the next three years.

“M&A  is also likely to ramp up in 2016 globally as US Fed rate hikes create  volatility and dislocation in the markets.   This will present companies with a strong balance sheet and cost of  capital to acquire publicly listed real estate trading at discounts to the  direct market, given the ongoing arbitrage between the private and public  markets.

“Urbanisation  and infrastructure spend in global, gateway cities is also a strong theme.  Companies with assets or development  expertise in markets positively impacted by this structural trend will continue  to benefit in 2016 as rental values grind higher. London West End, Mid/Downtown  Manhattan and Central wards of Tokyo are large beneficiaries of this momentum,  and can be accessed via retail, office and residential depending on the city or  infrastructure project.  In Japan, there  is also value in the lodging sector, given the country is preparing for the  Olympics and the Rugby World Cup during the next four years and the government  has an explicit target to increase international visitors.”

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