Minnow sizing up MLC whale

The understanding by DataRoom is that KKR has been keen to buy MLC for some time.

It may be widely accepted around the market that Kohlberg Kravis Roberts is in the box seat to buy NAB’s MLC wealth management business, but there have been some murmurings about IOOF and whether it may have put its best foot forward for a bid.

Most agree that MLC, which is expected to sell for up to $3bn, is out of reach for IOOF, which has a $1.6bn market value.

But there has been talk that it has expressed interest and stranger things have happened.

IOOF declined to comment when asked if it was an MLC suitor.

MLC — NAB’s wealth management arm — has been up for sale through Macquarie Capital and Morgan Stanley.

The understanding by DataRoom is that KKR has been keen to buy MLC for some time and has been waiting for NAB to conclude the separation work that was needed before it could be sold.

However, KKR bought a 55 per cent stake in the Colonial First State wealth management business from the CBA for $1.7bn in May and now needs to finalise the acquisition of this business before it can embark on further acquisitions.

The thinking is that it may take until next year, which could mean a sale of MLC could be some time away, and would involve Foreign Investment Review Board approval and the blessing from the Australian Prudential Regulation Authority.

It is understood that advisers Macquarie Capital and Morgan Stanley tested the market for MLC in recent weeks to determine if there were buyers for MLC other than KKR, given it would take time before it was ready to acquire the business.

However, while groups such as JC Flowers demonstrated some interest, the market-sounding exercise has so far been unsuccessful.

The CFS platform is seen as superior by many to that of MLC, and the understanding is that the game plan for KKR is to migrate the MLC business on to the CFS platform.

IOOF is considered to be a bottom feeder in the wealth market when it comes to acquisitions and strong operational synergies are not thought to exist with bringing the operations together.

MLC has $154bn of assets under management and the sale comes after NAB sold 80 per cent of its life insurance business within MLC to Nippon Life in 2016 for $2.4bn.

Apparently professional services firm Accenture is still carrying out work on MLC’s IT system in preparation for a sale.

Working for KKR is Bank of America.