CBA settles on IPO for First State

An IPO on the Australian Securities Exchange is expected by the end of the year for First State, which is still fundraising for its second European infrastructure fund.

Commonwealth Bank of Australia has decided to pursue an IPO for its global investment management arm, Colonial First State Global Asset Management.

The group, known as First State Investments outside of Australia, will be listed on the Australian Securities Exchange by the end of this year, CBA said, subject to market conditions.

The decision brings an end to CBA’s strategic review of First State, initiated in September last year, when it said it was considering “a range of options”, including an IPO, for the firm’s future. In preparation for the offering, CBA has appointed John Mulcahy, former chief executive of insurance group Suncorp, as chairman following the completion of the IPO.

“While CFSGAM has achieved significant growth, scale and diversification under the current ownership structure, the strategic review determined that an independent ownership model would provide greater benefits,” CBA stated.

First State declined to comment on the possible size of the IPO.

First State remains in market for the second series of its European Diversified Infrastructure Fund II. The vehicle had been targeting €700 million, in addition to the same amount garnered by the first series in April 2017. Late last year, First State is believed to have asked investors to go beyond the fund’s €900 million hard-cap, in anticipation of a final close this year between €1.1 billion to €1.2 billion.

The fund, targeting a gross IRR of between 8 percent and 15 percent, according to pension fund documents, agreed two investments last month, taking a 50.1 percent stake in Danish ferry operator Scandlines and buying the whole of E.ON’s gas grid business in Sweden. The two assets join French district heating firm Coriance and Portuguese wind company Finerge in EDIF II’s portfolio.

First State has A$219 billion ($170.2 billion; €137.5 billion) of assets under management, including about $5.8 billion of unlisted infrastructure assets and $8.2 billion of listed infrastructure assets.