Financial services giantAMPhas today confirmed plans to sell its investment administration business,Cogent, to French basedBNP Paribas.
BNP Paribas subsidiary, BNP Paribas Securities Services, will pay about $650 million for the business, including a repayment of about $22 million in loans from AMP and a contribution to disengagement costs of approximately $11 million.
Net profit from the sale for AMP after book value, disengagement costs and taxes is estimated to be more than $230 million, which will be spread over 2002 and 2003 and used to strengthen the group’s financial position.
The sale follows a review by AMP of Cogent in February, after which AMP signalled it would look to offload the business.
The purchase of Cogent will provide BNP Paribas with an investment operations outsourcing platform in the UK, as well as an additional platform for operations across Australasia.
The transaction will also result in AMP’s funds management division, Henderson Global Investors, which was one of Cogent’s biggest customers, becoming one of BNP Paribas’s top three clients.
News of the sale comes just one day after the AMP 2002 annual general meeting, where the group reported its net profit fell from $1.152 billion in 2000 to $690 million in 2001.
AMP also announced yesterday plans for a $400 million share buyback offer and forecast that it would meet its goal to achieve 10 per cent plus growth in core recurring operating margins for 2002, despite the drop in profits.
AMP acquired the Cogent business in 1998 through its purchase of Henderson. As at December 31, 2001, Cogent administered more than $407 billion of assets for more than 70 clients.
