Here’s why the BT Investment Management Ltd share price has fallen 7%

The BT Investment Management Ltd (ASX: BTT) share price is down 7% following a sell-down by its former strategic owner, Westpac Banking Corp (ASX: WBC).

BTT versus WBC share price

WBC share price

Source: Google Finance

What happened?

Over the past five years, Westpac’s strategic holding in BT Investment Management (BTIM), one of Australia’s leading wealth management businesses, has paid dividends.

However, the increasing regulatory headache and pressure on banks to divest their wealth management arms appear to have led to a sell-down by Australia’s second-largest banking group.

Yesterday, Westpac announced it would sell 60 million shares, worth more than $615 million or 19% of BTIM, to institutional investors. The sale price was a 10% discount to the 30-day average.

Brad Cooper, CEO of BT Financial Group said, “with the successful diversification of BTIM’s business outside Australia and BT Financial Group’s strategic focus on providing wealth solutions, including through our market leading Panorama platform, Westpac no longer needs to retain our shareholding in BTIM.”

Nonetheless, the bank retains a 9.8% stake in BTIM. However, it could be sold once its voluntary escrow period finishes in May 2018.

“The sale of shares by Westpac will improve the liquidity of the trading in our shares and broaden the register of shareholders.” BTIM Chairman, James Evans, said.

Foolish Takeaway

As can be seen above, BT Investment Management shares have been a very strong performer over recent years, as global markets staged a big recovery from the global financial crisis (GFC) of 2009. While I’m not a buyer of BT shares today, I have them on my watchlist.

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Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any company mentioned. Owen welcomes and encourages your feedback. You can follow him on Twitter @OwenRask.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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