what's wrong with AMP?!, page-115

Westpac is said to be casting the net far and wide to find a buyer for its $1bn-plus wealth-management unit, as groups such as JC Flowers and Apollo Global Management are targeted as potential acquirers.

But the big question is whether such private equity firms believe it is worth going up against competition favourite Kohlberg Kravis Roberts, which will be bidding through the Colonial First State wealth business it owns with CBA.

Wealth manager CFS would enjoy huge synergy benefits in buying the Westpac unit, but it is not clear it will get clearance for an acquisition from the Australian Competition & Consumer Commission.

Apparently the information memorandum has been distributed to about 20 parties.

Macquarie Group is known to be interested in taking a look. Apollo Global Management and JC Flowers have also received the sales documents but their interest remains unclear.

It is also a sure bet that IOOF will be in the mix, but whether it can execute on a transaction so soon after buying MLC is another matter.

Separating Westpac’s wealth management unit from the rest of the bank is not expected to be a cheap exercise, so the bank may not be prepared to compromise on price.

Brookfield is one to watch, given it has just paid Blackstone $1.7bn for its non-bank lender La Trobe Financial and is said to be on the lookout for opportunities in the financial services space.

Other trade players thought to have taken an IM are Hub24 and Netwealth, although it is thought that the wealth unit is a big bite for both businesses.

AustralianSuper is also thought to be considering the unit, as is AMP and Link Administration Holdings.

Private equity firms like Apollo Global Management, Blackstone, Brookfield and Carlyle Group are attracted to fund managers so they can put the funds into their own funds management operations.

While that offers strategic value, they would not have the same opportunities as CFS, which is being advised by JPMorgan, or IOOF.

Working on the sake is investment bank Morgan Stanley. First-round bids are expected in April.
On offer are Westpac’s wealth management products including Asgard, BT wrap and the Panorama platforms business.

Westpac Panorama’s BT Panorama wrap platform offers access to a range of tradeable securities and investment wrappers and is expected to be worth between 17 and 19 times its earnings before interest and tax.

In November, Westpac said it had more than 230,000 customers with about $105bn of funds under administration on the Panorama platform.

It has been generating up to $100m of gross profit.

Wealth management platforms require major spending on technology and any new buyer of BT Panorama will probably need to invest further.

BT Panorama describes itself as having the most adviser relationships in the market. It manages investment portfolios, self-managed super funds, superannuation and insurance.