Investment giant Perpetual chalked up several ‘major milestones’ in the third quarter even though assets under management fell 4.8pc over the period

Sydney-based financial services group Perpetual updated the market on Thursday as it remains locked in a $2.4bn takeover battle to acquire key competitor Pendal.

Perpetual CEO Rob Adams.

Perpetual says it has chalked up several “major milestones’’ in the third quarter of the financial year despite assets under management falling 4.8 per cent over the period.

 The Sydney-based financial services group updated the market on Thursday as it remains locked in a $2.4bn takeover battle to ­acquire key competitor Pendal.

 Perpetual revealed that its Corporate Trust’s funds under management increased 7 per cent to punch through the $1 trillion threshold for the first time, reaching $1.05 trillion.

 It said the Perpetual Private arm continued to see positive net flows and noted that recently acquired Jacaranda Financial Planning had exceeded expectations.

Perpetual said its international asset arm had benefited from strong net flows in global equities strategies. In particular, it highlighted continued growth in its US ethical investment specialist acquisition Trillium, which has recorded more than $1bn in net inflows over the past 12 months.

 Meanwhile, Perpetual’s domestic asset management division is on track to deliver its strongest year of positive inflows in seven years. Despite all these advances, total assets under management fell to $97.9bn, a 4.8 per cent drop compared to the prior period.

The change was attributed to negative foreign currency impacts and outflows from lower margin strategies at its recently acquired US firm, Barrow Hanley.

 But Perpetual said strong investment performance continued to build, with 92 per cent of Barrow Hanley strategies and 75 per cent of Australian equity strategies outperforming their benchmarks over three years. “We continue to make strong progress in executing the group’s strategic priorities and as a result we successfully reached a number of major milestones over the quarter, including Perpetual Corporate Trust exceeding $1 trillion in funds under administration for the first time,’’ chief executive Rob Adams said.

 “Our business is in a strong position to continue to invest in ­future growth, supported by the strength in our balance sheet and our proven track record of acquiring and integrating complimentary capabilities.

 “We remain focused on driving continued organic growth, whilst assessing multiple inorganic opportunities in a disciplined manner. We enter the next quarter with continued positive momentum across our businesses.”

 Investors appeared to welcome the news, sending the Perpetual share price up 42c to close at $32.68 on Thursday.

Perpetual’s market update notably made no mention of its audacious $2.4bn offer this month to acquire Pendal, which has rejected the overture because it undervalues the company.

 Perpetual launched a friendly bid to buy all of Pendal’s stock for $6.23 a share, a 40 per cent premium on its then-most recent value. But it was only a slight premium to the 180-day average, a factor that was a crucial factor in Pendal knocking back the bid.

Bell Potter analyst Marcus Barnard said a merger made sense even though Pendal’s initial rejection of the offer was sound.

 “On a ‘hostile bid basis’ it did undervalue Pendal, but treating a merger proposal in the same way as a hostile bid misses the point of what shareholders could have gained from a potential merger,” Mr Barnard said.

 Perpetual reported an underlying profit of $124m in the previous financial year even as its statutory profit fell 9 per cent to $75m. That was despite a 33 per cent spike in revenue to $652m.

Originally published as Investment giant Perpetual chalked up several ‘major milestones’ in the third quarter even though assets under management fell 4.8pc over the period