KKR will buy a majority stake in Commonwealth Bank of Australia's Colonial First State superannuation and retirement business.
CBA reached an agreement to sell a 55% stake in CFS to the New York-based private equity firm for A$1.7 billion ($1.1 billion) in cash, the bank said in an announcement to the Australian stock exchange Wednesday. CBA will retain the remaining 45% stake.
The announcement said KKR and CBA "intend to undertake a significant investment program" to bolster CFS' position as one of Australia's leading retail superannuation and investments businesses.
The sale — at a multiple of 15.5 times CFS' pro forma net profit after tax — is in keeping with CBA's strategy "to focus on its core banking businesses and to create a simpler and better bank, while allowing CFS to become a more focused standalone business," the announcement said.
Matt Comyn, CBA's CEO, said in the announcement: "We are confident that together with KKR, we can provide CFS with an increased capacity to invest in product innovation, new services and its digital capabilities."
A Hong Kong-based spokeswoman for KKR said the deal — KKR's first investment in Australia's superannuation sector — should be completed in the first half of 2021.