Commonwealth Bank of Australia (CBA) has agreed to sell a 55% stake in Colonial First State (CFS) to investment firm KKR in a deal worth A$1.7bn ($1.1bn).
The transaction values KKR 100% of Colonial at A$3.3bn and marks the final stage of CBA’s withdrawal from wealth management activities.
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KKR will fund the deal mainly through its Asian private equity fund.
Deal closure is anticipated in the first half of calendar year 2021 and awaits regulatory nod.
CBA CEO Matt Comyn said: “We are confident that together with KKR, we can provide CFS with an increased capacity to invest in product innovation, new services and its digital capabilities.”
CFS offers superannuation, investment and retirement products to individuals and corporate and superannuation fund investors.
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By GlobalDataThe business administered around $135bn in funds at the end of April 2020.
CBA believes that the deal will boost its CET1 capital ratio by 30-40 basis points.
It also expects a post-tax profit of $1.5bn from the sale.
KKR Australia partner and head Scott Bookmyer said: “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 advisors. 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.”
Last year, CBA offloaded Colonial First State Global Asset Management to Mitsubishi UFJ Trust and Banking.
