KKR to buy controlling stake in Commonwealth Bank of Australia’s wealth management business
- Sale of 55 per cent stake in Colonial First State latest retreat by Australian lender from wealth management following misconduct scandals
- Commonwealth Bank sold its Colonial asset management unit last year to Japan’s Mitsubishi UFJ Trust and Banking Corporation
Kohlberg Kravis Roberts (KKR) agreed on Wednesday to buy a controlling stake in Commonwealth Bank of Australia's (CBA) wealth management unit, the latest retreat by the nation’s biggest lenders from the sector following a series of misconduct scandals.
The American private equity giant will pay A$1.7 billion (US$1.1 billion) in cash for a 55 per cent stake in the Colonial First State (CFS) unit, which had A$135 billion in assets under administration at the end of April. The deal represents a multiple of 15.5 times the business’s net profit.
“CFS is one of the most respected providers of investment and superannuation services in Australia with a highly regarded product and service offering to members and advisers,” Scott Bookmyer, head of KKR Australia, said in a statement. “Partnering alongside CBA, we look forward to accelerating CFS’s transformation and further strengthening its market position to deliver long-term benefits to its member base.”
CBA acquired Colonial in 2000 for A$9.4 billion.
The transaction is subject to regulatory review, including by Australia’s Foreign Investment Review Board, and is expected to be completed in the first half of 2021.