Bain laser focused on Perpetual’s wealth management unit

Suitors are expected to bid between $450m and $550m.

Bain Capital’s bidding intentions for Perpetual are now known to be squarely focused on its wealth management unit and it remains in contention in the final stages of the two-party race.

The other suitor is known to be Oaktree Capital Management’s business AZ NGA, which the US private equity firm purchased for $240m last year.

Expectations are mounting that suitors bid between $450m and $550m for the unit that is on offer through Barrenjoey.

The Boston-based private equity fund that bought Virgin Australia and Accolade Wines is pursuing the wealth management arm after opting to walk away from Insignia Financial for which it bid earlier in the year and remains undecided on its intentions for the mortgages business La Trobe Financial, up for sale by Brookfield for $3bn.

Earlier there were suggestions it may bid for all of Perpetual.

A sale of wealth management for Perpetual would see the Australian-listed financial group with operations in asset management and a Corporate Trust division.

The Corporate Trust unit that Kohlberg Kravis Roberts tried to buy last year for $2.2bn has been sought after, but KKR walked away after an Australian Taxation Office ruling showed the deal would be accompanied by a large capital gains tax bill.

The sale of wealth management will reduce Perpetual’s debt, currently about $569m.

The wealth management unit generated underlying profit before tax of $29.2m for the six months to December, up 12 per cent on the previous corresponding period. Its funds under advice for the six months to December stood at $20.6bn, which was an 8 per cent increase.

Perpetual provides a range of investment management, superannuation, and retirement income products and services to the retail, wholesale and institutional markets through its wealth management arm.

Wealth management generates about 17 per cent of Perpetual’s overall revenue.

Earlier, Soul Patts considered buying the wealth management unit but walked away.

Other groups that are expected to be acquisitive in the Australian wealth management space are FirstCape and TA Associates.

Private equity firms are becoming increasingly interested in the private wealth sector, with a wealthy, ageing population.

Perpetual’s shares closed 14c higher at $20.60.