Will CFS deliver diamonds or stones for KKR?

15 May 2020

Outsider was delighted to read the news that, finally, the Commonwealth Bank had found an outfit with the will and the pockets deep enough to take on Colonial First State.

That outfit is, of course, US-based private equity player KKR which comes to the CFS party with a multi-billion war chest and a track record of turning around companies which have well, ahem, lost their mojo.

If you’re wondering, as Outsider was, about what other Australian investments KKR has on its books then think Arnotts, MYOB and radiation oncology group, GenesisCare to name but a few.

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But by any measure, the 55% stake in CFS represents KKR’s biggest current play in Australia and Outsider can only conclude that it sees great potential in the company’s superannuation and platform assets if, perhaps, not the shape and scale of its management team and workforce.

There was a time when CFS led the way in the Australian platform market only to find itself overtaken by the likes of HUB24 and Netwealth, therefore Outsider wonders whether some of the company’s former platform executives, and they know who they are, might be capable of being lured back.

By unloading 55% of CFS, the Commonwealth Bank has taken another step towards almost totally exiting the wealth management market. 

Outsider suspects that there are those on the board of National Australia Bank (NAB) who are feeling a tad envious as they look at the future prospects of MLC.

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