Last week Wesfarmers Ltd (ASX: WES) announced its plan to spin-off and list its Coles business on the Australian share market.
This morning Australia and New Zealand Banking Group (ASX: ANZ) announced that it would consider following in Wesfarmers' footsteps by doing the same thing with its UDC Finance business after New Zealand's Overseas Investment Office blocked its $620 million sale to Chinese conglomerate HNA Group late last year.
According to the release, the bank will explore the possibility of an initial public offering (IPO) of ordinary shares in UDC Finance as part of a range of strategic options.
What is UDC Finance?
UDC Finance is New Zealand's leading asset finance company which funds plant equipment, vehicles, and machinery. It was deemed a non-core business last year and put up for sale along with many other parts of the company.
ANZ New Zealand CEO David Hisco has stated that: "We have been looking at strategic options for UDC's future for some time as part of ANZ's strategy to simplify the bank and improve capital efficiency. While UDC is continuing to perform well and there is no immediate requirement to make decisions, after last year's planned sale to HNA did not proceed it makes sense to keep examining a broad range of options for UDC's future."
While the bank has acknowledged that it will take some time for a decision to be finalised, this appears to be the preferred option at the moment.
Should you buy ANZ shares?
While I don't think that this news is a game-changer, it is a step in the right direction in my opinion. The more non-core assets the bank offloads, the more attractive I think it becomes.
This, and recent share price weakness, could arguably make ANZ worth considering today. Although I would still choose Westpac Banking Corp (ASX: WBC) ahead of it, I think both banks could provide solid total returns over the next 12 months.
