By Paulina Duran
SYDNEY (Reuters) - Australia's scandal-hit AMP Ltd said on Thursday it would return up to almost $400 million to investors in the form of a special dividend and a share buyback, sending its stock surging as much as 14%.
It will also spend A$460 million ($330 million) to buy back a 15% stake in its investment management unit from Mitsubishi UFJ Financial Group Inc (MUFG) after its Japanese partner bought a rival company.
The moves are part of an overhaul by Australia's oldest wealth advisory firm which has seen two years of heavy investor outflows in the wake of a public inquiry into the finance sector which accused it of improperly charging fees and attempting to deceive regulators. AMP has also been hit by recent reports of allegations of sexual harassment by senior management at its two main units.
Both plans will be funded with proceeds of AMP's sale this year of its life insurance unit, which netted it A$2.5 billion in cash and 20% of the buyer Resolution Life.
"One year into our strategy we have completed a foundational step by selling our life business and returning up to A$544 million to our shareholders," Chief Executive Officer Francesco De Ferrari told an earnings briefing.
"The transformation culture is now our top priority."
AMP announced a A$344 million special dividend of 10 cents per share, fully franked, and a share buyback worth up to A$200 million to take place in the next 12 months subject to market conditions.
But it also warned it would not a pay a final dividend after first-half underlying profit slumped 42% as coronavirus-induced market turmoil pummelled fee income and resulted in higher loan-loss provisions at its banking unit.
AMP's domestic wealth-management unit reported net cash outflows of A$4.4 billion for the period, higher than the A$3.1 billion net outflows seen a year earlier.
Its shares climbed as much as 14% but later pared gains to be 11% higher, giving AMP a market value of A$5.3 billion. The stock is still 70% below levels seen in early 2018 before the wealth manager's troubles began.
A MUFG spokesman said although its capital alliance with AMP would end, it will "continue to explore extensive collaboration including distribution of AMP Capital's investment products".
MUFG last year paid A$4 billion to buy Colonial First State Global Asset Management from the Commonwealth Bank of Australia.
($1 = 1.3943 Australian dollars)
(Reporting by Paulina Duran in Sydney; Additional reporting by Shriya Ramakrishnan and A K Pranav in Bengaluru; Editing by Edwina Gibbs)