AMP Limited Deal Was Delayed As Industry Super Funds Pushes ASX

  • Nov 05, 2018 AEDT
  • Team Kalkine
AMP Limited Deal Was Delayed As Industry Super Funds Pushes ASX

After multiple shareholders including a powerful industry fund have begun lobbying the exchange, over AMP Limited's controversial life insurance divestment, the ASX has been a talking point since then. The Australian Council of Superannuation Investors which owns roughly 10 per cent of every company on the ASX and represents a group of industry funds with more than $2.3 trillion in assets is the ones who have written to the ASX about the deal.

ASX would carefully consider any new information that came to light, it had been approached by multiple parties about the proposed transaction. Under Chapter 11 of the listing rules to trigger a shareholder vote, the ASX has said the transaction did not meet the necessary thresholds.  

Edward John, ACSI's executive manager of governance, said it was fair for a company proposing a transformational deal to get shareholder approval before proceeding, declined to confirm whether the organization had written to the ASX about the deal. Mr. John said ‘To expect that company-changing transactions should require security holder approval, it is reasonable for investors. That's what the ASX listing rules are there for.’

ACSI's concern is a critical governance principle, the main concern is that, will the ASX allow shareholders to vote on this company-transforming transaction and apply the Listing Rules. Before the announcement, with specific reference to Chapter 11, a spokesperson for AMP said the transaction was discussed with the exchange.

Last week when fund-manager-turned-activist Merlon Capital criticised the deal controversy over the transaction emerged and the way AMP pitched it to shareholders in a letter where the deal was described as inept and value destroying.

To defend the deal, AMP Limited’s chairman David Murray appeared on ABC television and said it was completely unrealistic to put the deal to shareholders and said shareholders appoint directors to make those decisions for them.

Behind the push for a shareholder vote over the weekend, Allan Gray chief investment officer Simon Mawhinney threw his support, saying he was against the transaction but would be comfortable with either result.

For the view that shareholders appoint the board to implement the strategy, Mr. Mawhinney said he had sympathy. To advise them on their attempts to rush the deal and put it do a vote Merlon Capital has engaged Arnold Bloch Leibler partner Jeremy Leibler. Mr. Leibler had written to ASX chief compliance officer Kevin Lewis on Merlon's behalf and urged them to apply the listing rules and said he is surprised by the chain of events.

He said ‘The business which was valued $2 billion more than what they propose to sell it for as governed by the AMP Limited’s board. To ensure that they are not depriving shareholders, the board has proceeded without an independent expert's valuation.’ 92 percent of net tangible equity, 86 percent of annual revenue, 62 percent of AMP Limited's net profit after tax and 50 percent of shareholder equity is represented by the divestment of the life business.


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