Longstanding AMP shareholder Argo Investments has sold out of the wealth manager after years of underperformance, decrying its culture and approach to regulation just days before it delivers annual results.
Argo, a Sydney based listed investment company, sold the remainder of its stock in AMP last year in a move move managing director Jason Beddow said should have happened “a long time ago”.
“Really, it’s been a pretty woeful performing company for a pretty long time,” Mr Beddow said. “It’s strongest day in the market was the day it listed.”
Argo Investments managing director Jason Beddow says he should have sold AMP years ago.
AMP listed on the ASX in 1999 for $13.30 per share and now trades for around $1.56. Chief executive Francesco de Ferrari has acknowledged the company’s value is too low and is committed to his strategy of growing the asset management arm, reorganising the advice network and driving cultural change.
However, AMP has been described as “the company that kills careers” by former executives as its history is marred by a long list of corporate scandals.
Most recently, AMP’s chair resigned last August following an investor revolt over the promotion of AMP Capital executive Boe Pahari .
“It’s had lots of political, cultural, regulatory issues over a long period of time,” Mr Beddow said. “Clearly it’s just not had a handle on the regulatory environment for some of their responsibilities. It’s been a pretty disappointing company for a pretty long time.”
AMP’s reputation also went through a beating at the banking royal commission in 2018, where its fraught relationship with the regulator and its policy of charging of dead customers was exposed.
The wealth giant enlisted a team of accountants and lawyers last September to assist with a number of unsolicited offers to purchase its assets. US investment firm Ares is leading the pack after it offered a non-binding proposal to acquire 100 per cent of AMP for $1.85 per share in November.
Mr Beddow said AMP Capital has valuable assets, including its real estate and infrastructure portfolios, but added it was not easy to break up such a large financial company.
“It’s not like an industrial company where you can just sell that manufacturing plant and off it goes. There’s a lot of regulation around wealth, insurance, banking,” he said. “I think that’s part of the problem, it’s very, very complex.”
Morningstar analyst Shaun Ler said there had been “lots of noise with staff departures” following the sexual harassment scandal but added there was room for a turnaround.
“The majority of the attrition has been in the listed business, not so much the unlisted which is the true growth engine,” he said. “The long-term growth prospects are there.”
Morningstar currently has a “hold” recommendation on AMP and Mr Ler said Ares could revise its offer if it discovered hidden costs during its due diligence. “Anything below $1.70 would be unacceptable,” Mr Ler said.
Shareholders were looking for a “concrete answer” on the future of the company at the full-year results this Thursday, Mr Ler said. “Any uncertainty is not good.”
AMP declined to comment.
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