AMP has revealed the state of the UK businesses it is planning to list on the London Stock Exchange in December, and said it would still be open to offers if any bidders came forward.
Roger Yates, head of its fund management business, will be paid up to £3.3m a year to run HHG, the new UK company, which comprises Pearl Assurance, London Life, NPI, Henderson Global Investors, Towry Law and a 50 per cent stake in Virgin Money.
The company will have £69bn funds under management, and its life businesses, which are now closed to new customers, have an embedded value of £900m that HHG hopes can be released over time to shareholders. A total of £10.3m has been set aside as part of a reward package to retain 102 staff in the new company. AMP executives in Australia, however, will take a pay cut to reflect the smaller business they will be left with once the demerger occurs.
Andrew Mohl, chief executive of AMP, will see his remuneration drop 28 per cent. Henderson, the fund manager, will be the lead company in the new UK business, which will market itself as an asset manager and will be named HHG.
Henderson was rocked earlier this year, however, by revelations of major compliance failings at the company in an internal audit.
Mr Yates said all the issues in the report had been dealt with, adding: "I would be shocked, surprised and disappointed if any further compliance issues came to light,"
He also sought to reassure potential investors that HHG has sufficient reserves to cover mis-selling compensation payments and other liabilities in the group. A total of £1.4bn has been set aside in provisions for HHG. But the UK life funds were revealed as being very thin on capital, with Pearl, the strongest of funds, shown to have a free asset ratio of just 1.8 per cent.
AMP shareholders will be given one HHG share for every AMP share they own, and AMP will keep a 15 per cent stake in HHG. Mr Yates is now seeking support from the investment community in London for the new listing. "We want to persuade as many Australian shareholders to stay with us, but we have to assume that we will have to build a new shareholder constituency in the UK," Mr Yates said.
Despite AMP's willingness to engage in talks with bidders, Mr Yates said he was not "hawking his company around" and was determined to push ahead with the float. It is thought likely that bidders will re-emerge for all or parts of HHG, now that its capital issues have been addressed.
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