* AMP H1 net loss A$2.29 bln vs A$115 mln profit previous year
* Underlying H1 profit A$309 mln vs A$389 mln analyst forecast
* Sale of life insurance unit is back on at lower price
* A$650 mln capital raising underwritten at A$1.5 per share (Adds AMP investor comment & participation in the capital raising)
By Byron Kaye and Paulina Duran
SYDNEY, Aug 8 (Reuters) - Troubled Australian wealth manager AMP Ltd AMP.AX sought investor support for a capital raising to fund a turnaround plan on Thursday, as it posted its biggest half-year loss as a listed company following damaging revelations of misconduct.
AMP withheld a dividend for the first time as it struggles to steady itself a year after a public inquiry into Australia's finance sector accused it of improperly charging fees and attempting to deceive regulators. company said it would raise A$650 million ($440.1 million) in a share issue to fund a restructuring strategy, starting with a A$2.35 billion impairment on the value of its flagship wealth-management business in Australia and New Zealand.
A further cash injection could come from the sale of AMP's life insurance unit to Britain's Resolution Life, which the company said was back on less than a month after it appeared to be off because of lack of support from New Zealand regulators.
The sale price would now be A$3 billion, lower than the A$3.3 billion price announced previously, but would be mostly cash, AMP said.
"The most radical change from our strategy is required in our Australia wealth business," CEO Francesco De Ferrari (NYSE:RACE) told reporters.
The strategy would mean ending the majority of commission payments to AMP's financial advisers and renegotiating agreements with its network of aligned advisors to slash the value of their businesses.
De Ferrari said Australia's largest wealth manager was determined to "draw a line in the sand on the issues of the past", referring to revelations of misconduct last year which forced out most of the Sydney-listed company's top executives, pushed the former blue-chip stock to record lows and triggered a tsunami of fund withdrawals from angry customers.
"As we reposition our business it is our firm position to win back trust of our clients. This will not happen immediately but I am confident that this will happen," he said.
AMP investor Allan Gray Australia said the turnaround plan was credible and it would participate in the placement.
"I think the strategy, particularly as it relates to wealth management, is good," Simon Mawhinney, Allan Gray's chief investment officer, told Reuters after being briefed on the plans by AMP management.
WORSE THAN EXPECTED
For the six months to end-June, AMP posted a net loss of A$2.29 billion, its biggest for that period since listing two decades earlier, against a net profit of A$115 million last year.
Without counting the impairment charge to "reset the business", underlying profit for the half was A$309 million, down from A$495 million in the same period a year earlier, lower than JPMorgan's $389 million forecast.
At its Australian wealth-management unit, net cash outflows were A$3.1 billion, more than three times the rate of the net cash outflows it reported at the same time a year earlier.
Analysts were luke-warm on the company's recovery plans, citing a lack of detail at an investor briefing call where the company did not take questions.
AMP shares will remain in trading halt until Friday while the share placement, which has been underwritten at A$1.5 per share - a record low - takes place.
The company said it would give CEO De Ferrari another A$2 million in shares and rights to buy shares to reflect a one-third decline in the share price since he was hired, and to keep him "appropriately motivated".
AMP's chief financial officer was also leaving, two months after he was appointed, it added. ($1 = 1.4769 Australian dollars)