Alexis George doesn’t except the same kind of private equity play happening to Insignia Financial to erupt around AMP.
After spending the past few years transforming the business, AMP chief executive George reflects on whether the new AMP has become a more attractive investment target like its contemporary, which is currently being reviewed by three rival private equity bidders for potential acquisition.
“We’re in a really different space to Insignia in a couple of ways,” George tells Professional Planner after the firm released its FY24 results to ASX on Friday.
“Firstly, our portfolio is different. Yes, we both have MySuper and master trust; we both have platforms; and we both have some advice capability; but we also have a bank, and we also have some offshore partnerships in our portfolio. Very different to what Insignia has.”
Furthermore, AMP is much more progressed on its simplification agenda than Insignia is, where CEO Scott Hartley commenced his simplification program last July, only months after taking on the job.
“I know they’ve done some work, but they’ve got a lot of work to do in terms of bringing those businesses together still,” George says.
“We’ve done a lot of that work over the last three to four years so we’re in quite different positions.”
AMP had moved to simplify its business into five channels – advice, platforms, super and investments, bank, and NZ wealth management – which has since reduced to four with the sale of the majority of its financial advice business.
But rather than clamouring for a buyout in the style of Insignia, George says shareholder concerns have been centred around capital return. The firm has returned $1.1 billion since August 2022 and had declared a full year dividend of 3 cents per share.
“I think some of the shareholders would’ve liked more capital in the dividend declaration,” Geroge says.
“The reality is we’re in a pretty volatile world as we sit here today and while there’s upsides, there’s still some legacy items to deal with so we thought it was prudent to keep that buffer of about $100 million in surplus capital.”
The dividend declaration came with a statutory net profit after tax (NPAT) of $150 million, dropping 43.4 per cent from $265 million, reflecting business simplification spend and the separation of the advice arm while FY23 also reflected the gain of sales of AMP Capital and SuperConcepts.
AMP sold its licensee arm to Entireti for $10.2 million and minority stakes in 16 advice practices to AZ NGA for $82.5 million in August.
The group had earmarked $36 million in one-off loses as part of separating the advice business out of the company.
AMP maintains a 30 per cent stake in NewCo, with plans to sell down to advisers and management in NewCo.
AMP reported underlying net profit after tax (NPAT), which excludes one-off costs and is used to measure the overall business health, had increased from $205 million in FY23 15.1 per cent to $236 million.
On the platform side of the business, underlying NPAT increased 18.9 per cent from $90 million to $107 million. During FY24 North signed 99 new distribution agreements with AFSLs, and activated approximately 140 net new advisers with funds under advice of over $1 million.
The bank part of the business launched a small business and consumer digital bank this month, which the firm said was delivered “on time and on budget” and claimed the new digital bank has secured 11,600 early signups ahead of release.
