AMP (NZX:AMP): What are its priorities for the future?

Highlights

• AMP is planning a demerger that is likely to be completed in the first half of this year.
• The demerger would create 2 more businesses, AMP Limited and PrivateMarketsCo.
• AMP has a target of attaining a near-term EBIT margin in the 20-25% range.

AMP Limited (NZX:AMP; ASX:AMP) is a dual-listed financial services entity. The Group is planning a demerger that is likely to be completed in the first half of this year. The demerger that will create 2 businesses and further aid in focusing on their respective markets and growth prospects.

AMP had announced in April 2021 that it will be pursuing a demerger of private markets business of AMP Capital.

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Demerger to help tap growth prospects

The demerger would create 2 more focused businesses, which will be better prepared to take up and allocate capital to different growth prospects and realise efficiencies.

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One will be AMP Limited, which will be a retail-focused wealth manager in Australia and NZ with strategic investments in key global partnerships. The other will be Private Markets, a prominent private markets investment manager. It has a solid performance track record in distinguished asset classes.

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AMP Limited and PrivateMarketsCo will benefit from the following-

• Easy operating models and the capability to drive.
• Direct door to capital markets to encourage growth.
• Responsiveness to pursue growth prospects – organic and inorganic.
• Improved ability to draw and retain clients and talent.
• Dedicated and individual management teams in each business.

Delisting from NZX

AMP also announced last month that it would become a sole listing on the ASX in February this year, after delisting from the NZX Main Board. The delisting would encourage streamlining of shareholder administration of AMP in advance of the demerger in H1 2022.

Priorities for 2022

Priorities for the coming 12 months include:

• Completing demerger and becoming a standalone, integrated investment manager by June 2022.
• Simplifying cost base and targeting run-rate costs of nearly A$300 million by FY23.
• Growing client base across all markets through a global client solutions team.
• Diversifying product offerings, creating value through sustainable investment practices.

AMP has a target of attaining a near-term EBIT margin in the 20-25% range and a long-term target in the 30-35% range.

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The Group is also targeting strong net cash flow growth, leading to ~10% annual growth in AUM across the next 2-3 years, supported by platform and service improvements and developing EFA relationships and support.

Shares of AMP declined 0.96% in trading on Friday to close at $1.03.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)