AMP announced in an ASX listing on Friday that it intends to pursue a demerger of AMP Capital’s private markets arm, following the board’s decision to conclude “discussions” with Ares Management.

The demerger of its infrastructure and property businesses would create two more focused businesses — one, a retail-focused, wealth management, investment and banking group under the name AMP Limited, and the other a private markets investment manager Private Markets.

“Our portfolio review confirmed that AMP has two distinct businesses in retail wealth and institutional private markets, with different client bases and growth opportunities,” said AMP chair Debra Hazelton.

“We have had substantial and constructive discussions with Ares regarding a sale; however, we have not been able to reach an agreement that would deliver appropriate value for our shareholders. The board has therefore concluded a demerger provides investors with the strongest value outcome, creating two more focused entities, with the agility to pursue new growth opportunities in their respective markets.”

As part of the separation, AMP confirmed that AMP Capital global head of infrastructure equity and north-west region Boe Pahari would depart the business.

Mr Pahari was appointed chief executive of AMP Capital last year, but was later demoted following a scandal which centred on previous sexual harassment claims made against him.

As previously announced, Alex George will be the CEO of AMP Limited and will join AMP in the third quarter, with the demerger said to be completed in the first half of 2022.

AMP’s share price sunk further on Thursday to finish at $1.125, following the release of its Q1 results which confirmed a $2.9 billion outflow for AMP Capital.

But despite AMP’s wealth management division also racking up $1.5 billion in net cash outflows, outgoing AMP chief executive Francesco De Ferrari praised the company’s resilience.

“Business performance remained resilient during the first quarter as we continued to make progress on delivery of our transformation strategy to become a simpler, client-led business,” Mr De Ferrari said.

“We are accelerating change within AMP, having made strong progress on addressing our legacy issues, including our client remediation program, which is close to 90 per cent complete. We remain focused on delivering critical priorities to progress our transformation over the next quarter and continue positioning the business for future growth.”