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Money Management

Commonwealth Bank of Australia cancels IPO for First State Investments, will spin out unit instead

Commonwealth Bank of Australia will not go ahead with a previously announced initial public offering of First State Investments, the bank said.

The bank had said in April it would list its money management business by the end of the year. The Sydney-based bank’s unit is known in Australia as Colonial First State Global Asset Management and has A$207 billion ($154 billion) in assets under management across equities, fixed income, multiasset, and alternatives and real assets strategies.

CBA said First State will instead be spun out as part of a wider group of businesses, known as CFS Group, which also will include the bank’s wealth management and mortgage broking businesses, said a news release Monday. CFS Group will also include CBA’s superannuation, investment and retirement platform Colonial First State, which has more than A$135 billion in funds under administration.

CFS will have a separate stock listing. As an independent business, “CFS Group can enable CFSGAM to realize its full potential for its customers and staff and, as a result, the previously announced initial public offering of CFSGAM will no longer proceed,” the news release said.

A search for a CEO of CFS Group is underway. The bank will provide further details on its strategy as part of its 2018 annual results announcement Aug. 8. The spinout is subject to final approval by the CBA board, shareholders and regulators. Should it be approved, the separation is expected to be completed next year.