ANZ in talks to buy KKR’s accounting software firm in

A pedestrian is reflected in the window of a branch of the Australia and New Zealand Banking Group (ANZ) in central Sydney, Australia, October 25, 2017. REUTERS/Steven Saphore

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  • Local media reports peg deal at over A$4.5 bln
  • Talks with KKR to acquire MYOB
  • Analysts doubt value-addition from deal

July 13 (Reuters) – Australia and New Zealand Banking Group Ltd (ANZ.AX) said on Wednesday it was in talks with private equity giant KKR & Co (KKR.N) to buy software firm MYOB Group, in a deal that local media has pegged at over A$4.5 billion ($3.04 billion).

ANZ’s confirmation of the news comes at a time when major Australian banks have been divesting non-core operations to simplify their businesses and focus on their core competency, lending.

ANZ’s larger ‘Big 4’ rival Westpac Banking Corp (WBC.AX) has sold its general insurance arm and some of its financial advisory business in the past two years, while Commonwealth Bank (CBA.AX) exited a near two-decade investment in China’s Bank of Hangzhou (600926.SS) earlier this month. read more

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Aggressive hikes by the central bank to rein in inflation have rudely awaken banks from pandemic-era near-zero interest rates, keeping margins under pressure.

As rising rates now have the housing market in a chokehold, banks are knuckling down on their lending operations. In such an environment, analysts have cast doubts on ANZ’s decision to buy an accounting software company from a PE firm at a hefty price.

KKR had taken MYOB private for A$1.6 billion in a 2019 deal, which was one of its biggest acquisitions in Australia at the time. (https://www.reuters.com/article/myob-m-a-kkr-idINKCN1RF0BX)

Banks do not necessarily need to own accounting platforms as they have products which take data from such platforms to approve loans and accurately access cash flow risks, Jefferies analysts said in a note.

Morningstar analyst Nathan Zaia said he would “rather not see so much capital deployed in a non-banking business, especially buying a business from private equity.”

ANZ may be looking to win market share in small and medium enterprise (SME) lending through an integrated banking and accounting offering, but there are less capital-intensive ways of doing that, Zaia said.

While KKR declined to provide additional details on the deal, ANZ wasn’t immediately available for further comments but said in a statement that no deal has been reached. It also did not disclose the deal value.

ANZ’s shares closed 1.2% lower at A$22.43 on Wednesday, when its “big four” peers closed higher.

($1 = 1.4780 Australian dollars)

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Reporting by Indranil Sarkar and Harshita Swaminathan in Bengaluru; Editing by Amy Caren Daniel and Rashmi Aich

Our Standards: The Thomson Reuters Trust Principles.