Westpac to sell out of BTIM

Westpac is offloading a $730m stake in BT Investment Management, with plans to exit its holding entirely.

Westpac says it no longer needs to retain a stake in BTIM. Picture: AAP Image/Joel Carrett.

Westpac is offloading a $730 million stake in the listed BT Investment Management, ahead of a full selldown of its entire holding in the $3.8 billion funds manager.

It comes as the government prepares to hit the banking sector with big new tax and as the banks prepare for stricter capital ratio requirements under incoming Basel rules.

BT shares are close to a record high, and last traded at $12.18. Westpac is selling the stake at a 16 per cent discount, with an offer price range between $10.25 and $10.75 a share.

Macquarie is acting as broker and underwriter on the deal, which will see Westpac reduce its stake in the investment manager from 30 per cent to 9.8 per cent by Friday.

The sale will add 10 basis points to Westpac’s Tier 1 capital reserves, and comes as banks warn the federal government its new $6.2bn major bank levy will make it harder for the lenders to retain regulatory capital for their reserve buffers.

BT Investment management, which was spun out of Westpac and listed on the ASX in 2007, has around $91bn in funds under management.

Westpac, the second largest bank in Australia, still fully owns the not-to-be-confused wealth management arm BT Financial Group, which houses its financial advice, superannuation and life insurance businesses.

BT Financial Group Brad Cooper said BTIM would “remain an important asset management provider to BT Financial Group.”

“However, with the successful diversification of BTIM’s business outside Australia and BT Financial Group’s strategic focus on providing wealth solutions, including through our market leading Panorama platform, Westpac no longer needs to retain a shareholding in BTIM,” Mr Cooper said.

Westpac has one seat on the seven-member BTIM board. The bank said it intends, subject to favourable market conditions, to sell its remaining 10 per cent shareholding in BTIM “in the future”, but not before May 2018.

The Sydney-based BTIM has more than $91bn in funds under management and is headed for a significant expansion into the US market.

BTIM’s funds under management have more than doubled since 2012, when it was $45bn.

BTIM’s clients are US pension funds, Australian superannuation funds, UK pension funds, sovereign wealth funds, financial planners, private banks and net high-worth family offices.