KKR faces super shortfall after early release hits CBA

KKR is to push ahead with the acquisition of a 55pc stake in Colonial First State for $1.7bn despite hundreds of millions being pulled from funds.

Latest figures from the Australian Prudential Regulatory Authority reveal $547m had been sapped from funds under CBA’s CFS banner. Hollie Adams/The Australian

Private equity giant KKR is understood to be preparing to look past the sudden loss of hundreds of millions of dollars in super funds from Commonwealth Bank’s wealth arm even though the lower super balances weren’t factored into the recently announced sale of the fund.

KKR will still push ahead with the acquisition of a 55 per cent stake in Colonial First State for $1.7bn, despite one of its funds being hardest hit — as a proportion of total assets — under the early release of super rules.

Latest figures from the Australian Prudential Regulatory Authority reveal $547m had been sapped from funds under CBA’s CFS banner since the scheme was implemented in April.

CFS’s Commonwealth Essential Super fund has the highest proportion of funds released compared to its total assets under management in the country’s almost $3 trillion superannuation industry.

The Essential Super fund ­released 7.31 per cent of its total ­assets under management, paying $276.6m to more than 41,000 ­account holders.

According to annual super fund figures released by APRA, the fund has a total assets under management of $3.8bn

CFS said Essential Super had a proportionally higher number of younger members, which resulted in the large volume of withdrawal requests.

“CFS’s investment approach has always favoured investing in assets that have a high level of liquidity,” a spokeswoman said.

“We are committed to helping our members as they deal with uncertainty and financial hardship and have helped more than 83,000 of our members who have so far applied for the scheme.”

Essential Super fund ­represents 3.7 per cent of CFS’s total funds under management.

CBA’s decision to take a step back from its wealth business ­follows a growing trend by major banks ditching interests in the superannuation sector.

It is understood negotiations between CBA and KKR has already factored in the potential impacts of the early release of super.

The scheme was introduced April 7, while the purchase deal for CFS was made public on May 13.

Early release of super allows Australian savers to withdraw up to $10,000 of funds this financial year and in the coming 2021 financial year.

It is available to people who have become unemployed during the pandemic or experienced a reduction in working hours. Withdrawal requests are tax free.

According to APRA figures, CFS’s FirstChoice Superannuation Trust paid $262m to 33,393 members, at an average payment request of $7845. Its Rollover Superannuation Fund released $7.9m, as of May 17.

CBA, Avanteos Investments dished out $103.6m through its respective funds, while the Commonwealth Bank Group Super fund paid out $32.3m to 3543 withdrawal requests.