US wealth managers circle Colonial First

There is growing evidence that the Commonwealth Bank of Australia might wind up taking the trade sale route for its $5 billion Colonial First State Global Asset Management, with several major wealth managers out of the US now said to be circling.

Many are taking the opportunity to kick the tyres not just on CFSGAM but the National Australia Bank’s wealth operations, which it also wants to sell.

The thinking has always been that CFSGAM would be listed on the Australian Securities Exchange in a similar way to Westpac’s wealth manager BT, but a high enough price could potentially sway the thinking in the bank’s boardroom.

JPMorgan was working on potential plans for CFSGAM for much of last year and now the understanding is that it also has UBS in its team, while other investment bankers may also land a mandate in the weeks ahead.

Some say that plans remain on hold for CFSGAM until the bank appoints a new chief executive to replace Ian Narev, although there is the strong expectation that it will be
sold.

Among the possibilities could be groups such as Citi, JPMorgan Asset Management and Franklin Templeton.

It’s also worth including Blackrock, which is highly committed to the Australian market.

It has appointed former Perpetual star stockpicker Charlie Lanchester as the head of an Australian active fund for the group.

One sticking point is that the buyer would need to write a $5bn cheque for the business, which is considered a lot of money, and the Australian Securities Exchange market value is only 2 per cent of that globally, which means offshore groups may not see value for money.

Entry to set up here is low and some say Blackrock might see no need to buy CFSGAM when it already has an Australian operations.

Macquarie may also partner with a US fund to buy the business should it remain an interested acquirer.