KKR making moves on Westpac wealth assets

Westpac is known to be preparing its non-core assets for sale, with its general insurance business the first to be offloaded. Picture: AFP

Private equity firm Kohlberg Kravis Roberts is believed to be making early advances at Westpac’s wealth assets that are soon expected to hit the market.

However, while inquiries are believed to have been made by the private equity firm to Westpac, it is understood that objections by the Australian Competition & Consumer Commission remains a concern ahead of a highly anticipated sales campaign that is likely to begin in the coming months.

KKR has been active in the Australian wealth management space of late, circling numerous assets including AMP and the NAB’s wealth manager, MLC.

The understanding was that it was a keen acquirer of MLC, but an acquisition would have held up the approval process for its purchase in May of a 55 per cent stake in Commonwealth Bank’s Colonial First State wealth management business for $1.7bn.

It was also looking at an acquisition of AMP’s wealth assets in November.

However, it is understood to have since walked away from acquiring those assets, as has Macquarie Capital.

Westpac is known to be preparing its non-core assets for sale, with its general insurance business the first to be offloaded, while efforts are being made to divest its Pacific banking operations.

It announced while delivering its interim results in May that it would create a “specialist businesses” division, overseen by Jason Yetton and comprising businesses that were non-core.

The general insurance business is likely to appeal to insurers IAG and QBE, along with Suncorp, Zurich and Allianz.

But it is thought the bank will wait until the new year to launch the sales process for the $700m-odd insurance arm in earnest.

This is given that QBE does not yet have a chief executive, while IAG has only recently appointed Nick Hawkins as its managing director.

Experts predict that by next year the companies will be better placed to make major strategic decisions.

Investment bank Goldman Sachs was believed to be carrying out work on Westpac’s wealth platform Panorama this year, although it is not clear whether it has been officially appointed.

Other buyers that could line up for Westpac’s wealth business include BGH Capital, Blackstone, JC Flowers, TPG Capital and Apollo Global Management.

Other underbidders in the contest for MLC included CC Capital and Platinum Equity. They may also circle.

The MLC business was sold to IOOF for $1.44bn.

Analysts estimate Westpac’s wealth platform could be worth between $700m and $1bn, while its insurance business could be worth between $500m and $1bn.

Its car loans, equipment and auto loans business, which is also non-core, was earlier estimated to be worth $4.9bn.