The U.S. private equity giant is purchasing a 55-percent stake in Commonwealth Bank's wealth management subsidiary Colonial First State (CFS) for $1.7 billion, giving it a large slice of the Australian superannuation market.
This puts a $3.3 billion price tag on the superannuation, funds management and wealth platform, with the sale price representing a multiple of 15.5x CFS’s pro forma net profit after tax of approximately $200 million, according to the announcement.
«The transaction is consistent with CBA’s strategy to focus on its core banking businesses and to create a simpler and better bank, while allowing CFS to become a more focused standalone business and deliver a wide range of benefits for members,» Commonwealth Bank said.
Following the deal, Commonwealth Bank said it will undertake a «significant investment program» with KKR, which includes a simplified product offering, improved service experience, modernised technology systems, and better access to member education, support and self-service tools.
No More Spin-Off
In late 2018, Commonwealth Bank said it planned to spin off Colonial First State to focus on core banking activities.
However, it suspended plans in the wake of a year-long public inquiry into the financial sector, which subjected wealth managers to intense scrutiny over widespread instances of misconduct.
