Who will snap up this $45.4bn Westpac business?

Some of the world's largest private equity and funds management firms are in the running

Who will snap up this $45.4bn Westpac business?

Some of the world’s largest private equity and funds management companies are among the firms competing to buy Westpac’s BT superannuation unit. The companies vying to snap up the business will learn by the end of the month if they’ve made it to the next round of bidding.

After receiving expressions of interest last month, Westpac reportedly plans to inform interested parties of a short list of potential buyers late this month, according to The Australian. The division manages $45.4 billion and may sell for as much as $400 million.

Non-binding first-round offers for the superannuation business were due in December. That news came as Westpac slashed as many as 50 positions in the unit to make it more efficient, The Australian reported.

Superannuation giant AustralianSuper has expressed interest in the unit, as has private equity firm KKR with its partner Commonwealth Bank, which jointly own Colonial First State. Other firms reportedly expressing interest included Apollo Global Management Capital, The Carlyle Group and JC Flowers. Investment giant Vanguard – which is slated to launch a low-cost Australian superannuation fund later this year – has also made noises about buying the Westpac unit. Sources told The Australian that some interested firms were seeking to form a bidding consortium ahead of the auction’s next round.

Westpac’s current plan is to make a final decision on the sale in April at the earliest, given the complexity of separating the business and the fact that transitional service agreements would need to be implemented, sources told The Australian.

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However, the bank is reportedly eager to agree to a sale ahead of a second performance test by the prudential regulator of its basic superannuation products. Westpac’s BT MySuper product failed last year’s test – and failing for a second year would mean it would no longer be allowed to accept new members.

Westpac is divesting several of its assets in an effort to focus on its core functions, The Australian reported.