Some observers watching the bloody Hayne show yesterday might be wondering: Who would want to run AMP anyway?
Commonwealth Bank will float its global asset management arm on the local stock exchange, which is likely to result in the year’s largest initial public offering with an estimated value of almost $5 billion.
Colonial First State Global Asset Management, known outside the country as First State Investments, would be listed on the ASX by the end of the year, the bank said in a statement.
Former Suncorp-Metway chief executive John Mulcahy will be appointed chairman of the group once it was spun off from the bank. Mark Lazberger will continue as chief executive.
CFSGAM has $219bn worth of assets under its control. Its funds management income for the 2017 financial year was $837 million, down on the previous year.
There is an expectation that a retail offer anywhere between $1bn and $1.5bn would form the basis of any IPO. The listing will be by far the largest this year.
Other deals looming include an IPO of the $4bn Quadrant Energy and the consumer finance operation Latitude, owned by private equity firms Kohlberg Kravis Roberts and Varde Partners, along with Deutsche.
CBA had put up the division for review after the sale of its life insurance arm CommInsure to Hong Kong’s AIA Group for $3.8bn. As pressure increases on the banking sector — from shareholders, politicians and consumers — to reform the outdated ¢ vertically-integrated structure, the float of CFSGAM has CBA focused on back-to-basics banking.
“We examined long-term Commonwealth Bank shareholder value and also considered the ability of CFSGAM to serve the interests of its clients, attract and retain key personnel and better grow its business,” he said.
“While CFSGAM has achieved significant growth, scale and diversification under the current ownership structure, the strategic review determined that an independent ownership model would provide greater benefits.”
The float will be subject to market conditions and regulatory approval. Other directors on the CFSGAM board will be former chairman of Commonwealth Superannuation Corporation Susan Doyle, Ernst & Young executive James Millar, former Macquarie executive Gail
Pemberton and former Fidelity boss Richard Wastcoat.
Analysts say a large portion of the value in CFSGAM is retaining the fund managers and star stock pickers to generate the returns the asset manager and its investors have become used to.
It is the latest in a string of moves by Australia’s largest banks to strip themselves of problematic or underperforming businesses, in a bid to refocus on home loans and deposits, which are traditionally more profitable.
ANZ has its wealth arm OnePath up for sale, while National Australia Bank recently sold 80 per cent of its life insurance business. Westpac, which launched a partial listing of its BT Investment Management in 2007, recently said it would sell down its remaining stake.