Field narrows in race for Perpetual wealth unit

Shares in Perpetual fell 9 per cent on Thursday as it posted a $12m net profit, compared to $34.5m last year.

The focus for a contest to buy Perpetual’s wealth management unit has narrowed to Oaktree, TA Associates and FirstCape.

FirstCape is owned by Pacific Equity Partners, NAB and Jarden. Operating under brands ­including JBWere, Harbour Asset Management and Jarden Wealth, it is known to be keen to expand.

Oaktree in September bought a major stake in professional advisory business AZ NGA, outlaying $240m to become its largest shareholder.

Oaktree worked with Jefferies and Jarden on the deal, so a deal would make sense.

TA Associates, meanwhile, struck an agreement to invest in New Zealand wealth manager Craigs, which had $NZ32bn ($29bn) of funds under advice in December and is known to have been looking at opportunities in the Australian market.

It is known to have weighed a purchase of Perpetual’s Wealth Management arm before.

The unit is expected to sell for between $500m and $1bn and was placed on the market this month after Perpetual called off a deal to sell its Corporate Trust and Wealth Management units to KKR for $2.2bn.

Shares in Perpetual fell 9 per cent on Thursday as it posted a $12m net profit, compared to $34.5m last year.

The wealth management unit generated underlying profit before tax of $29.2m, which was up 12 per cent on the previous corresponding period.

Its funds under management gained $20.6bn, an 8 per cent increase on the previous corresponding period.

Expectations are mounting that following a sale of the wealth unit, Perpetual will demerge its corporate trust arm, with work being undertaken to separate the business from its other operations, which include asset management.

It told the market on Thursday that the wealth management business had continued to grow across market and non-market linked revenues.

Organic growth was supported by contributions in the pre-­retiree segment as well as in accounting practice, its Fordham wealth business and the medical and aged-care segments.

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.

Private equity firms are becoming increasingly eager to invest in the private wealth sector, with a wealthy, ageing population and superannuation industry driving returns.

Perpetual’s major investor, Soul Patts, was understood to have considered a purchase of the unit, but later walked away.

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