CBA sells Count Financial for a song

John Kavanagh Financial institutions / Big five & fintech

Commonwealth Bank has extracted Count Financial Planning from its wealth demerger entity, NewCo, and will sell it to CountPlus.

CBA said in a statement that CountPlus was the logical owner of Count Financial, as it has equity holdings in 15 Count Financial member firms.

CBA, in turn, has a 35.9 per cent holding in CountPlus – an ASX-listed company. It said it planned to sell that stake once the transaction was completed.

The deal is worth A$2.5 million. CBA bought the business eight years ago for $370 million.

The sale price represents a significant discount to net tangible assets. According to CountPlus, the Count Financial balance sheet has net assets of $15 million, no debt and cash of $12 million.

CBA said Count Financial made an estimated loss of $13 million in 2018/19.

The bank said it would continue to support and manage customer remediation arising from past misconduct at Count Financial after the completion of the transaction.

It will give CountPlus a $200 million indemnity for remediation claims. The indemnity represents a potential contingent liability of $56 million in excess of the previously disclosed customer remediation provisions that CBA has made in relation to Count Financial.

Following the transaction, NewCo will be made up of Colonial First State, Aussie Home Loans and CBA’s 16 per cent holding in Mortgage Choice.

NewCo was formed in June last year and in October Colonial First State Global Asset Management was taken out when it was sold to Mitsubishi UFJ Trust and Banking Corp.

CountPlus said in a statement that it would hold 85 per cent of Count Financial and the balance would be held by a discretionary trust established for the benefit of Count member firms.

Count Financial has 359 financial advisers in 160 firms, and $8.1 billion of funds under administration.

CountPlus will hold an extraordinary general meeting in August to put the deal to a shareholder vote.