Soul Pattinson increases dividend, rules out Platinum Asset Management bid
The investment house has ruled out making a bid for Platinum Asset Management after an unsuccessful attempt for Perpetual, as it closes in on becoming Australia’s first dividend aristocrat.
Investment house Washington H. Soul Pattinson transactions soared to $4.7bn over the past financial year as chief executive Todd Barlow ruled out a takeover move for Platinum Asset Management following its unsuccessful bid for Perpetual.
Its total transaction volume jumped 52 per cent to $4.7bn in the 2024 financial year from $3.1bn last year as it expanded interests in a broad range of businesses — from uranium to swim schools and beefing up its stake in fund manager Perpetual. It invested $2.8bn into public equities and private investment.
“We have no plans to make an offer. We invested in Perpetual at the time because we saw there was a potential uplift by separating out parts that were reflected in the market. That was simply a one-off, opportunistic thing that we looked at,” Mr Barlow said on Thursday after reporting its annual financial results.
Soul Pattinson increased its stake in Perpetual to 15 per cent in the December half amid a play for the fund manager’s corporate trust and wealth assets. While Soul Pattinson was rebuffed, Mr Barlow described that play as a one-time move and would not look to replicate it with Platinum.
Platinum rebuffed a takeover offer from Regal Partners, saying the current terms of the proposal undervalue Platinum.
Soul Pattinson has increased its dividend by 9.2 per cent to 95c a share for the year to July 31 — placing it now one year away from becoming Australia’s first dividend aristocrat of having lifted dividends for 25 years in a row.
The group, which started out operating Soul Pattinson chemists before investing elsewhere — now holding sizeable stakes in TPG, Brickworks and New Hope — reported a 10.3 per cent increase in net asset value to $11.8bn. Net cash flow from investments increased 10.3 per cent to $468m.
Mr Barlow said the group had delivered what it had done for a long time, but was beginning to see the flow on effects from its Milton acquisition three years start to pay off.
“In the three years since the Milton acquisition, it has been phenomenal. It has probably been the best acquisition ever for us, and the last year was just a continuation of the work that we’ve been doing,” he said.
“The growth in investment activity has just been moving into those new asset classes that we’ve embarked on in the last three years. We have now built up a team and the capability to establish ourselves in the market.
The total portfolio grew by 8.7 per cent to a net asset value of $11.8bn, with the listed investment house having over 200 actively managed investments, of which most are seen as high quality and risk adjusted opportunities.
Soul Pattinson said it did not consider profit to be an accurate reflection of investment performance, but statutory profit after tax fell 27.8 per cent to $498.8m.
The decline reflected lower share of profit contributions from strategic portfolio investments Brickworks and New Hope, which were impacted by lower property contributions and lower average thermal coal prices during the period, respectively.
Chief investment officer Brendan O’Dea said that Soul Pattinson would continue its investment ethos that had paid investments for the past 24 years as it saw equity markets overvalued and better returns in private markets.
“It’s more of the same as when it’s not broken we shouldn’t try and fix it,” he said. “The opportunities we are finding in private credit and private equity are compelling. We think listed markets are probably a little expensive right now, and we have taken capital out of the listed part of the portfolio as a result.”
Mr O’Shea said that markets were experiencing a natural push-pull cycle, with corporate earnings slowing amid the expectations that central banks will ease rates and drive growth.
“The good news for us is that we’re not looking to invest around that necessarily. We’re looking to put investments in our portfolio that perform well through the cycle and generate cash for us and outperformance over the long term,” he said.
“We’ve probably seen the tops of the rate cycle in most developed markets for now, and that’s probably what’s holding up asset prices.’
Shares in Soul Pattinson were up 0.8 per cent to $34.24 on Thursday.
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