Perpetual break-up possible as suitors circle wealth manager

Perpetual CEO Rob Adams.

Suitors circling $2.2 billion wealth manager Perpetual are looking at a break-up.

Sources say they are considering a deal where one party would take Perpetual’s corporate trustee division and another its wealth management operations.

Financial services deals are popular among private equity funds desperate to spend money with rates so low during the pandemic.

Perpetual comprises three divisions: asset management, a trust company and a private wealth division.

Market experts say the company’s share price has not reflected its value recently.

Some believe that a buyout fund would find it difficult to make a deal stack up unless it has an existing platform in Australia, while others say that break-up plays involving listed groups are not easy to pull off.

The corporate trustee division has been the subject of buyer interest in the past, but generates strong earnings for Perpetual, which is unlikely to sell the division.

Earlier, Bank of New York, which offers custodian services, had been touted as a possible acquirer, as had the Dutch professional services firm TMF.

For the six months to December, Perpetual generated $29.1 million in net profit, down from $51.6 million in the previous corresponding period as Covid-19 took its toll by creating market volatility.

Some suggest that Asian buyout fund Baring might be interested in some parts of the business.