Commonwealth Bank of Australia (CBA) has agreed to sell a 55% stake in its superannuation, investment and retirement product provider to US private equity firm KKR.
The deal is the “final stage” of CBA’s exit from various wealth management activities over the last few years, it said in a statement.
The bank will receive around A$1.7bn (£897m, $1.1bn, €1.02bn) for Colonial First State (CFS) from KKR, which will use its Asian private equity fund to pay for the investment.
In addition, the transaction is expected to enhance the tools provided and “the ease of doing business with CFS” for financial advisers.
Member programme
Michael Venter, chief operating officer at CFS, said: “We are excited about the future opportunities this transaction is expected to deliver for our members.
“Further investment over the coming years will result in a better member experience and we expect the investment will deliver a wide range of benefits for all of our stakeholders.”
CFS has proposed an investment programme to deliver a range of benefits for its members including:
- a simplified product offering, with “competitive pricing” and more options;
- accelerated investment in digital channels;
- modernised technology systems; and
- better access to member education, support and self-service tools.
Remediation
CBA also said that it “remains committed to delivering on the undertakings it made following the Royal Commission”.
“The transaction is not expected to have any impact on ongoing remediation activities that relate to CFS, which will continue as planned,” CBA said.
“CFS will also continue to assist the Australian Securities and Investments Commission (Asic) and [the Australian Prudential Regulation Authority] with existing and any future investigations.”
Upon completion, Commonwealth Bank of Australia will “indemnify” CFS for certain pre-completion conduct, including liabilities relating to remediation activities, regulatory actions and third-party claims.
The deal is expected to be completed in the first half of 2021.
