AMP Ltd. said Wednesday it has agreed to sell the Sydney-based group's A$31 billion ($22.4 billion) domestic real estate and infrastructure equity business to Dexus Funds Management.
An AMP announcement to Australia's stock exchange said AMP would sell those business segments, which had been housed in a new corporate entity, Collimate Capital, in anticipation of a demerger exercise, to Dexus for an upfront cash consideration of A$250 million.
AMP said it could receive a further cash earnout of up to A$300 million subject to retention of assets under management over a nine-month period after the deal's expected completion during the second half of the year.
AMP went on to warn it was unlikely to earn the full A$300 million, amid current expectations that those businesses could see outflows of roughly A$3 billion.
Dexus, in its separate announcement to the stock exchange, said it was already factoring in those outflows. The Sydney-based real estate manager, with A$45.3 billion in Australian property assets, said Collimate Capital's platform currently has A$27.9 billion in domestic real estate and domestic infrastructure equity AUM, with A$18.2 billion in real estate and A$9.7 billion in infrastructure.
A Dexus spokesman couldn't immediately be reached for further comment.
Both company announcements said Dexus will also acquire AMP's existing stakes of A$180 million and commitments of A$270 million in its platform for cash consideration of up to A$450 million, "subject to discussions with fund investors, pre-emptive rights processes and applicable consents."
AMP said in its release it would retain the 24.99% stake it acquired in Los Angeles-based real estate investment firm PCCP in 2017 and its sponsor stake in PCCP Fund VIII, which together had a total book value of A$208 million as of Dec. 31.
The deal will leave Collimate Capital with A$9 billion in international infrastructure equity assets. AMP said in its release that it remains in discussions with parties interested in acquiring that business.
AMP said subject to the completion of the sale of the domestic real estate and infrastructure equity businesses, "AMP will no longer pursue a demerger of Collimate Capital."
In Australian trading Wednesday, AMP's share price declined roughly 1% to A$1.025 in a session where the broader S&P/ASX index finished 0.78% lower. Dexus shares rose roughly 2% to A$11.
