Apollo in buyers orbit for NAB wealth unit MLC

MLC chief executive Geoff Lloyd and newly appointed chairman Rob Coombe. Picture: Jane Dempster

Apollo Global Management is understood to have emerged among the private equity firms in the process to buy wealth management business MLC from National Australia Bank.

The US-based buyout fund joins The Carlyle Group, Blackstone and Kohlberg Kravis Roberts in the mix for the operation. Working on the sale is Macquarie Capital and Morgan Stanley.

The buyout funds are said to have been circling the wealth manager for at least a year, with NAB making its intentions known to sell or demerge the business in 2018 as part of a trend across major banks to simplify their operations.

Earlier, BGH Capital and Hellman and Friedman were said to be taking a look.

Apparently, private equity firms have been keen to sidestep the advice component within MLC, but NAB is believed to be unprepared to break up the operation that has $154bn of assets under management and generated $42m in cash earnings for the six months to March.

A sale was delayed following the Hayne royal commission into banking and the time taken to separate the wealth operation from the bank.

It was thought that a deal came close to being completed between the bank and a private equity fund earlier this year.

KKR last month purchased a 55 per cent stake in CBA’s wealth manager Colonial First State in a transaction that valued the business at $3.3bn, and it could be highly motivated to win the business, given the synergies likely to exist from owning both operations.

Blackstone was the close underbidder, as revealed by DataRoom at the time.

The understanding is that both buyout funds only wanted to acquire part of the business because $3.3bn was an amount too large to allocate to the Australian market, which calls into question how much they are prepared to outlay for MLC.

US-based KKR owns an interest in financial advisory and accounting firm Findex, which was considered to be an initial public offering candidate when conditions were more buoyant.

In Australia, Blackstone is a major shareholder in wealth manager La Trobe Financial.

Apparently, trade players are also taking a look at MLC, but the expectation is that private equity will win the competition.

Listed wealth managers IOOF and AMP have had their fair share of challenges following the royal commission findings that included charging fees for no service.

MLC provides investment, superannuation and financial advice to corporate, institutional and retail customers. It was owned by property and investment firm Lendlease, which sold the business in 2000 to NAB for $4.56bn.

Nippon Life paid NAB $2.4bn in 2016 for an 80 per cent stake of MLC Life.

Buyout funds globally are interested in acquiring companies in the lending space amid a low-interest-rate environment.