HHG, the troubled UK arm about to be demerged from its Australian parent AMP, yesterday said it would raise £100m as part of its listing on the London Stock Exchange next month.
The group, which includes Henderson Global Investors (HGI), Pearl Assurance, NPI, London Life, Towry Law and a 50 per cent stake in Virgin Money, plans to list in London on 23 December. Of the £100m raised, £50m will be used to strengthen the company's balance sheet and £50m will be used to buy out a majority ownership of HGI, which is currently owned through a complex web of intra-company loans by the shareholder capital of Pearl.
The issue will only be open to institutional investors and will be underwritten by the investment banks, UBS and Cazenove. AMP, which has been desperate to hive off its loss-making UK businesses, had previously said that it would not raise capital on flotation but it has flagged that it would need to raise funds to finance the demerger by the middle of next year. Roger Yates, the chief executive of HHG, said, however, there had been sufficient investor demand for HHG stock to warrant raising capital at the listing.
"HHG will have shareholder assets of £1.5bn, and funds under management of £69bn. We are taking the opportunity to raise capital now from a desire to remove uncertainty from the group and because of the level of investor interest following our intention to demerge," Mr Yates said.
HHG's life businesses remain thinly capitalised and only meet their solvency requirements after receiving special waivers from the regulator, which may deter investors. They are now closed to new business but still have exposure to mis-selling claims. AMP management had hoped to sell off the UK businesses, but potential buyers were unwilling to take on the open-ended liabilities. Mr Yates said HHG was no longer in talks with any interested parties.
The UK businesses have been a millstone for the AMP group, which until this year was the backbone of corporate Australia. AMP posted a record loss in May for 2002 following a £900m write-down of UK assets.Reuse content