Macquarie sets sights on CFSGAM acquisition

Macquarie Group is believed to be positioning itself to bid for the Commonwealth Bank’s wealth management platform, Colonial First State Global Asset Management.

CFSGAM is subject to a strategic review through JPMorgan but the expectation is that the division with be floated with a $4bn-odd equity value, demerged or sold off if a buyer with a large enough appetite presents itself.

The $4bn valuation estimate is based on the multiple that Westpac’s listed wealth management spin-off BT Investment Management trades on.

Apparently, CBA is expected to name additional investment banking advisory team members to work on plans for CFSGAM by October 13.

CFSGAM was tipped to be under review by CBA by this column earlier this year, and the bank was expected to move on plans soon after selling its Australia and New Zealand life insurance operations, which AIA bought last month for $3.8bn.

Earlier, Macquarie was picked as a logical adviser for CBA on the wealth management platform, but now the thinking is that it has been ruled out of the contest because it is lining up as a buyer.

Many analysts say the platform would be a positive acquisition for Macquarie, which already controls $481bn worth of assets, including prized infrastructure around the world.

CFSGAM has $219bn worth of assets under its control, so any deal would offer a significant lift to Macquarie’s overall earnings.

Other potential buyers for the business include AMP and Henderson Group, but many say that the acquisition would be too large for them.

Macquarie’s market value is $31bn and it could bring in partners for an acquisition. Another possibility is that it buys only parts of the business.

CFSGAM comprises domestic, Asian and European businesses and Macquarie could be interested in only one of those divisions.

Still, much of what happens is thought to depend on the position of Colonial First State fund managers, who will no doubt have their say.

The understanding is that many want to control their destiny and favour a public listing.

They also remain eager to cut ties with the CBA following the Austrac probe, so a sale could happen sooner rather than later.

Apparently all the major investment banks have pitched for a role to advise CBA on CFSGAM, but no formal process has been run.

Some believe UBS is fronting as a favourite, given the Swiss bank’s history with CBA.