Last year AMP Capital’s managing director Stephen Dunne had a headache, albeit a pleasant one.
From December 2010 Japan’s biggest publicly traded bank, Mitsubishi UFJ Financial Group, had made it clear to Dunne that if the two companies were going to have a relationship, the Tokyo-based company had to have a stake in AMP.
But the asset management unit of AMP Ltd. had no shares to give Mitsubishi, hence Dunne’s headache. AMP Capital would have to issue new shares, something it had never done to anyone except its parent. What followed were months of intensive negotiations that involved teams of executives and lawyers from Australia and Japan.
They crisscrossed the equator several times, ironing out an agreement that eventually had Mitsubishi paying $425 million for a 15 per cent shareholding in AMP Capital.
For Mitsubishi the investment is part of an effort to acquire stakes in financial companies around the world. It owns more than a fifth of Wall Street investment bank Morgan Stanley. It has a shareholding in Aberdeen Asset Management that may eventually be as high as 19.9 per cent.
“Mitsubishi wants a relationship that will last for decades,” says Dunne.
He hopes Mitsubishi’s shareholding will give the Sydney-based company access to $4.5 trillion, the second-biggest savings market in the world.
“Japan is exporting capital as options to invest domestically have limited appeal,” says Dunne.
AMP will also use Mizuho, Nikko and Nomura to deliver its investment products to retail investors. Mitsubishi is the sole distributor of AMP’s products to Japanese institutional investors.
Mitsubishi didn’t return calls seeking comment.
Dunne has also sought to cement relations with China. For years Chinese regulators and insurance companies have traipsed through AMP’s skyscraper overlooking the city’s harbour bridge and opera house, discussing pensions, organisational development and investments.
In 1997 AMP opened a representative office in Beijing. China Life Insurance Co., the country’s biggest insurer, has re-signed a partnership agreement with AMP.
“We’d like to see that relationship grow,” says Dunne. “We see opportunities in retail funds management and can work with them on infrastructure investments.”
AMP has $123 billion in assets under management. It was the first Australian company authorised to trade Chinese A shares. These facts are important to Chinese regulators and asset managers.
The Chinese government is seeking advice on its pension system and has been examining Australia’s compulsory superannuation system.
“The Chinese government is running pilots based on pension systems centred around defined contributions,” says Dunne.
Chinese regulations prohibit life insurance companies running fund management companies.
Elsewhere in Asia, AMP has had an office in India since 1997.
“We’re trying to find the right partner to take us into India’s retail space,” says Dunne. “We’re not taking a view to go it alone in Asia. Our success in Japan to date has been our ability to work with wealth management systems on the ground.”
