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Despite all the hype surrounding outsourcing, AMP is considering off-loading
its investment operations business. So who are the likely buyers? By Jo McGinley.
WHILE MANY financial institutions are scrambling to get into outsourcing for asset managers, one firm may be about to abandon ship. Australian financial services group, AMP, is considering selling Cogent, its wholly-owned investment operations business that has 143 billion in assets under administration.
The official line from AMP is that it is "exploring options" for restructuring the ownership of Cogent. A letter sent to clients by AMP's chief executive, Paul Batchelor, revealed: "AMP is currently in discussions with a number of parties regarding options for restructuring the business, including a possible sale." Other than that, Cogent is remaining tight-lipped, although it says a decision will be made by June.
Cogent put in a decent performance in 2001, with profits up 33% to A$24 million. Growth in external fee income was particularly impressive, up by 58% to A$122 million. But it is an expensive business to run, with a cost-income ratio of 86%. Any acquirer would clearly be looking for economies of scale.
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