Dexus profits plunge 97% ahead of AMP business acquisition
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. .
AUTHOR
Charbel Kadib
Recommended for you
Australian fund managers are actively seeking to launch Cayman versions of their funds to attract offshore flows, with Regal Partners set to launch its latest offering this month.
As private markets gain traction in Australia but only a limited pool of talent is available, three recruiters explore whether fund managers should consider looking overseas to find top talent.
With an explosion of private credit managers appearing in the market, two alternatives experts believe a consolidation is needed to maintain the quality of the sector.
Bentham Asset Management has become the latest fund manager to expand its distribution team as it reports increased interest in its credit strategies.
