Dexus profits plunge 97% ahead of AMP business acquisition

amp Dexus collimate capital

15 February 2023
| By Charbel Kadib |
image
image
expand image

ASX-listed real estate asset manager Dexus Funds Management has released its results for the first half of the 2023 financial year, posting a statutory net profit after tax (NPAT) of $23.1 million, down 97.1% from $803.2 million a year ago.

This result was underpinned by weakness in the Australian property market, with the total value of its property portfolio decreasing by approximately $242.2 million. 

In its fund management business, it managed $26.3 billion of funds across 19 funds.

Dexus CEO, Darren Steinberg, said he was pleased with the underlying result amid “subdued market conditions”.

“Despite subdued market conditions, it has been an active six months. We have announced $773 million of balance sheet divestments since the FY22 result, recycling capital into higher returning opportunities and maintaining a strong balance sheet.

Looking ahead, Steinberg said the group’s looming acquisition of Collimate Capital, AMP’s domestic real estate and infrastructure equity business, would strengthen the company’s underlying position.

“With the upcoming addition of AMP’s real estate and infrastructure platform, we have refined our vision to be recognised as the leading real asset investment manager in Australia, with the strategic objectives of generating resilient income streams and being identified as the investment manager of choice,” he said.

“Our balance sheet provides resilient cash earnings from a portfolio of high-quality investments, and our funds business adds capital efficient, higher growth exposure within the overall risk profile of the business.”

In January, AMP revealed the Dexus deal had been stalled by a Chinese regulator, which was yet to approve the transfer of AMP’s interest in China Life AMP Asset Management (CLAMP). 

AMP and Dexus had previously agreed to provide each party with the right to terminate the agreement from 27 January, 2023 if all necessary conditions were not satisfied. 

However, in lieu of continued “uncertainty” over the future of AMP’s stake in CLAMP, the companies had extended the date for satisfaction or waiver of conditions precedent to 28 February, 2023. 

As a result of the delay, AMP agreed to lower the purchase price by 10% to $225 million, and forfeit the remaining potential funds under management (FUM) based earnout (currently $26 million). 

A contingency plan had also been put in place in the absence of approval from the applicable Chinese regulator. 

AMP and Dexus have entered into a non-binding term sheet, which considers a revised transaction structure with a two-stage completion process. 

Under a revised structure, most legal entities (holding the majority of the Collimate Capital domestic assets and management rights) and employees would be permitted to transfer to Dexus at first completion — prior to the satisfaction of the remaining condition and by March 2023. 

The transfer of the one remaining entity, which currently holds the interest in CLAMP, would take place following receipt of the necessary regulatory approval. .

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

3 weeks 4 days ago

This verdict highlights something deeply wrong and rotten at the heart of the FSCP. We are witnessing a heavy-handed, op...

1 month ago

Interesting. Would be good to know the details of the StrategyOne deal....

1 month ago

Insignia Financial has confirmed it is considering a preliminary non-binding proposal received from a US private equity giant to acquire the firm. ...

1 week 3 days ago

Six of the seven listed financial advice licensees have reported positive share price growth in 2024, with AMP and Insignia successfully reversing earlier losses. ...

5 days 16 hours ago

Specialist wealth platform provider Mason Stevens has become the latest target of an acquisition as it enters a binding agreement with a leading Sydney-based private equi...

4 days 20 hours ago