Could AMP Ltd (ASX: AMP) shareholders be heading for a $1 billion payday?
Maybe, according to analysts at broker Ord Minnett.
They noted that following major asset sales in FY22, AMP shareholders could benefit from buybacks after the financial services company has paid down debt.
A billion dollars in capital returns?
In April this year, AMP shares got a big lift when the company sold its funds management branch, formerly AMP Capital and rebranded to Collimate Capital.
Collimate was divested in two parts.
International digital infrastructure firm DigitalBridge acquired Collimateâs international infrastructure equity business for some $699 million.
In turn, Dexus Property Group (ASX: DXS) acquired Collimateâs real estate funds management and domestic infrastructure equity businesses.
As the Motley Fool reported at the time, the combined sales were expected to bring AMP a net capital increase of around $1.1 billion.
The company stated it intended to return most of the funds to shareholders through a capital return as well as pay down some of its debt.
Commenting on the logic behind the divestments, AMP CEO Alexis George said:
Post completion of the two sales, AMP Limited will be a more focused entity, concentrated on driving our core banking and retail wealth businesses in Australia and New Zealand, with a core objective of accelerating our strategy and increasing our competitiveness.
Analysts at Ord Minnett (as reported by The Australian) estimate that REA will use around $400 million of the $1.8 billion it garnered from asset sales to pay down its debt. That leaves the lionâs share of the funds available for capital returns through a share buyback.
Ord Minnett estimated AMP will have a net tangible asset value of $1.35 per share after the recent asset sales. Itâs currently trading for $1.17 per share.
How have AMP shares been tracking?
After a difficult few years, AMP shares have outperformed the benchmark this past year.
Over the past 12 months, the AMP share price is up 9% compared to a 7% loss posted by the S&P/ASX 200 Index (ASX: XJO).
The post Are AMP shareholders heading for a $1 billion pay day? appeared first on The Motley Fool Australia.
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More reading
- Here are the top 10 ASX 200 shares today
- Up 13% in July, can the AMP share price maintain its momentum?
- Here’s the good news about bear markets
- The AMP share price has surged 9% so far this month. Can it keep going?
- ‘Ready to compete’: Will AMP seek out new opportunities or stick to its knitting?
Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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