Private markets capability critical to LGT-CBA deal
Amid the investor shift towards private assets, LGT Crestone believes it was chosen to acquire Commonwealth Private Advice due to its strong private market capability.
Earlier this week, it was announced that LGT Crestone had signed an agreement to acquire Commonwealth Bank of Australia’s (CBA) personal advice business, Commonwealth Private Advice.
The business is focused on ultra-high-net-worth (UHNW) and high-net-worth (HNW) individuals. It currently comprises approximately 500 clients and over $5 billion in client assets.
LGT Crestone is set to integrate approximately 40 experienced advisers, associates and support employees into its business – including 19 investment advisers – while the transaction is expected to reach completion by mid-2025.
According to Michael Chisholm, CEO of LGT Crestone, the decision followed a competitive tender process among numerous firms bidding to purchase CBA’s advice arm.
“Gresham Partners managed the process which was a competitive tender. LGT Crestone was one of many that responded. We are delighted CBA has chosen LGT Crestone as the trusted home for their highly valued high-net-worth and ultra-high-net-worth clients and employees,” Chisholm said to Money Management.
“It’s a terrific validation of our efforts to build a truly outstanding private wealth advice business catering to the needs of the most sophisticated investors in Australia.”
Unpacking this further, the chief executive highlighted LGT Crestone’s focus on private markets as a determining factor as to why the firm was chosen.
“This acquisition strengthens the industry’s move towards specialised wealth management for private markets, where demand is rising. Ultra-high-net-worth investors, particularly, are looking for exclusive access to private assets and the right investment managers to navigate them – something LGT Crestone prioritises.”
Research by Praemium and Investment Trends recently uncovered that 146,000 HNW individuals are currently investing in private markets, with 32 per cent planning to increase their investments in the next year. Additionally, another 32,000 investors are expected to enter the market within the next 12 months – symbolising a key opportunity for financial advisers.
Referencing LGT Crestone’s own research, Chisholm said: “As our 2024 State of Wealth Report shows, 95 per cent of UHNWs value exclusivity, and while private allocations may dip due to risk concerns, our clients lead in private market investments. This deal aligns perfectly with that need for high-calibre, exclusive investment opportunities.”
The Australian wealth management firm is backed by the significant scale of LGT Group, which has $500 billion in client assets globally. This means LGT Crestone is poised to support Commonwealth Private Advice’s clients amid the rising demand for private market investments, he added.
“This deal reflects LGT Crestone’s strategic approach to growth, driven by our unique and compelling offering, which continues to attract strong interest in the market. Our focus is not on pursuing growth for growth’s sake, but rather on ensuring we have the scale, expertise and capabilities to meet the evolving needs of our clients. With the increasing trend from public to private markets, there is a growing demand for access to top-tier managers, and we are well-positioned to meet that demand.”
The 19 investment advisers it will bring on as a result of the deal will also enhance LGT Crestone’s existing capabilities and see further expansion of its sophisticated investor client base.
AUTHOR
Jasmine Siljic
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