Contrarian fund manager, Allan Gray has said that the Australian Securities Exchange (ASX) has failed to protect the investors’ rights after AMP has announced a sale of it its life insurance arm at a discount to its previously disclosed embedded value.
The firm’s managing director, Simon Mawhinney described the move as plain wrong that AMP proceeded to sell its life business despite concerns from shareholders.
“In this instance, it appears the ASX is favouring a select group of advisers ahead of shareholders. You cannot have a functioning market unless shareholder rights and governance are at the forefront, and this is a blatant example of where this has fallen over,” he said.
According to the firm, the businesses sold accounted for in excess of half of the total value of the AMP in the eyes of the sharemarket, which was evidenced by its pre-sale market capitalisation of approximately $10 billion, and a 25 per cent fall on the day of the announcement.
“These proceeds plus the fall in stock market capitalisation as a result of this deal, accounted for more than 50 per cent of the pre-deal market capitalisation – a clear indication that this was a material transaction and AMP’s main undertaking,” Mawhinney added.
“We remain committed to canvassing for change as the status quo is far from ideal. The ASX can and should do better with their rules, how they are applied and the instances in which it uses its discretion."