Why has the AMP share price rallied today?

Posted: 30 November 2021 1:04 pm
News
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Shares in the struggling wealth management giant are down more than 40% in the last 12 months.

Investors in AMP (ASX: AMP) shares have had little reason to cheer over the last month. However, on Tuesday the wealth management giant’s stock was among the top gainers on the ASX, climbing nearly 7% in early trade to $1.07.

Why has the AMP stock price jumped?

AMP shares rallied after the company told shareholders on its Investor Day that the demerger of its AMP Capital private markets business is on track to be completed in the first half of 2022, and outlined the future strategies and directions for both operations.

AMP said it will operate as a retail wealth manager in Australia and New Zealand, repositioning its core capabilities to drive growth in banking and wealth platforms, and also look at new opportunities including in retirement and direct-to-consumer solutions, as well as adjacent businesses.

The new entity, PrivateMarketsCo, will build its presence as a global leader in the fast-growing private markets industry, with focus on growing its client base and scaling the existing infrastructure and real estate investment strategies.

“In AMP Limited and PrivateMarketsCo we have two businesses with considerable growth opportunities, but which operate in very different markets, with different customers, and geographic focus,” AMP chief executive Alexis George told shareholders.

“Separation and demerger will enable both businesses to accelerate their growth strategies, as well as simplify and improve efficiency.”

Savings

Meanwhile, AMP, which outlined a number of write downs against its FY21 accounts in the past few weeks, had some positive news for investors in the form of cost savings.

The firm has committed to $115 million of further cost savings between fiscal 2022 and 2024, on top of its already-stated $300 million cost reduction program.

On the other hand, PrivateMarketsCo aims to simplify its business and organisation structure and expects to achieve a run-rate cost base of $300 million by fiscal 2023.

Investors of the struggling wealth management giant have been pinning their hopes on efforts to restructure the company to move on from the shadow of the financial services scandal first revealed in 2018. In the last 12 months, AMP’s market value is down nearly 40%.

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