Commonwealth Bank of Australia is set to sell Colonial First State Global Asset Management (CFSGAM) to Japanese company Mitsubishi UFJ Financial Group (MUFG), having received all the required regulatory approvals.
The transaction is expected to be complete in early August, with MUFG owned Mitsubishi UFJ Trust and Banking Corporation (MUTB) gaining the nine Colonial First subsidiaries that form the Global Asset Management group.
The final sale proceeds are expected be $4.2 billion, CBA reported, subject to completion adjustments. Initially CBA had sold CFSGAM for $2.9 billion, more than 17 times CFG’s annual profit.
CFSGAM, first established in 1998, reported it manages $204.2 billion in assets under management as at 31 December 2018. The business has 800 staff across 11 offices in Asia, Australia, Europe and North America.
MUTB on the other hand, is one of Japan's largest asset managers, holding $641 billion in assets under management as at December. The company was reported to represent a 98 per cent market share for mutual funds and 25 per cent for pension funds in Japan.
CBA secured the sale last year in October, with NAB following soon afterwards to sell off its wealth arm, MLC. CBA's transaction was described as a tactical retreat, sidestepping ongoing financial advice scandals folding out from the royal commission.
The bank had committed in June last year to demerge its wealth management and mortgage broking businesses, including Colonial First State, Count Financial, Financial Wisdom, Aussie Home Loans and CBA’s minority shareholdings in ASX-listed companies CountPlus and Mortgage Choice.
However, CBA had paused the exit of its wealth management and mortgage broking businesses in March, following the release of its full response to implementing the recommendations from the royal commission.
Additionally, CBA also confirmed it would be offloading its advice group CountPlus for $2.5 million. The firm generated a net profit after tax of $2.6 million in the second half of 2018, a boost from its $3.3 million loss in the first half.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
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