NAB’s MLC wealth management frontrunner emerges

KKR recently bought a 55 per cent stake in the Colonial First State wealth management business from Bank of America for $1.7bn and the appeal of MLC is the opportunity to consolidate the market. Picture: Hollie Adams/The Australian

Kohlberg Kravis Roberts is shaping up as the frontrunner to buy NAB’s MLC wealth management business, according to market sources.

The New York-based KKR has been competing with JC Flowers in the final stages of the contest for the wealth manager, which is advised by Morgan Stanley and Macquarie Capital.

While JC Flowers, which is backed by former Westpac boss David Morgan and advised by JPMorgan, is understood to have progressed in the competition, the view of some is that its interest is lukewarm on the asset.

Other buyout funds, such as The Carlyle Group and Blackstone, are understood to have receded in the race early on.

Some have estimated that MLC could sell for about $3bn, but the understanding around the market is that the business has capital spending requirements worth about $400m.

KKR recently bought a 55 per cent stake in the Colonial First State wealth management business from Bank of America for $1.7bn and the appeal of MLC is the opportunity to consolidate the market.

It is thought that KKR, which is advised by Bank of America, will wait until it secures Foreign Investment Review Board approval and the blessing from the Australian Prudential Regulation Authority on the CFS deal before it acquires another business.

As a result, a conclusion to the MLC process could take four or five months.

Some suspect that the plan for KKR would be to migrate the MLC business on to the Colonial First State platform.

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.

The sale comes after NAB sold 80 per cent of its life insurance business within MLC to Nippon Life in 2016 for $2.4bn.

MLC has $154bn of assets under management.