Commonwealth Bank of Australia to sell 55% stake in Colonial First State to KKR

Commonwealth Bank of Australia (CBA) has signed a deal to sell a 55% stake in Australian wealth management group Colonial First State (CFS) to global investment firm KKR for about AUD 1.7 billion ($1.1 billion).

Established in 1988, Colonial First State provides superannuation, investment, and retirement products to individuals and corporate and superannuation fund investors, apart from operating and administrating investment platforms. As of 30 April, 2020, the wealth management group had nearly AUD 135 billion of funds under administration.

The transaction implies a total valuation for the wealth management business on a 100% basis of AUD 3.3 billion.

Commonwealth Bank of Australia said that the deal is consistent with its strategy of focusing on its core banking businesses and for creating a simpler and better bank. At the same time, the transaction will allow Colonial First State in becoming a more focussed standalone business and provide a wide variety of benefits for members.

Together, Commonwealth Bank of Australia and KKR will look to take up a significant investment program to consolidate the position of Colonial First State as one of the leading retail superannuation and investments businesses in Australia.

Commonwealth Bank of Australia to sell 55% stake in Colonial First State to KKR for $1.1 billion. Photo courtesy of Commonwealth Bank of Australia.

Matt Comyn – Commonwealth Bank of Australia CEO 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. We have a shared vision for CFS to be one of the leading superannuation and investment businesses in Australia, offering members greater choice and better value.”

The transaction marks the final phase of the previously announced planned exits of the Australian banking group from various wealth management activities over recent times.

Scott Bookmyer – Partner and Head of KKR Australia said: “KKR is honoured to have the opportunity to invest alongside CBA to further the success of this leading platform. 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.”

Completion of the deal, which is subject to the Australian Prudential Regulation Authority (APRA) and Foreign Investment Review Board (FIRB) regulatory approvals, is likely to occur in the first half of next year.