Perpetual is likely to secure a knockout price for its corporate trust and wealth units from Kohlberg Kravis Roberts, with one market assessment being a sale price of about $2.1bn.
Corporate trust generates about $85m of annual net profit and the wealth management unit about $50m.
One market expert said similar corporate trust businesses sold for about 15 times their net profit, and wealth management 12 times. But they said they believed the real question would be what the asset management division would be worth on its own.
Globally, comparable companies trade at six to eight times their net profit, and Perpetual’s market value is currently at $2.72bn.
It also calls into question the next move of major shareholder Soul Patts.
Perpetual has been running the sale process on its corporate trust and wealth management divisions as part of a strategic review for several months after it received a $3bn bid from Soul Patts last year.
Soul Patts holds about 12 per cent of Perpetual.
Perpetual’s response to that proposal was that it undervalued its business.
Perpetual has taken time updating the market on developments surrounding its strategic review. But it confirmed this week that KKR (advised by Jefferies) was in exclusive talks to buy both businesses, as first flagged by DataRoom on April 19.
DataRoom also revealed that KKR was in the mix and that it was firming as the favourite in the contest.
Sources say a deal above $2bn would be well received and would probably compensate shareholders from any capital gains tax leakage from breaking up the business. But it is understood that advisers are working on a structure where they would demerge the two units simultaneously with the sale to avoid tax costs.
An attractive offer will help Perpetual to pay down its $734m debt taken on through its $2.5bn acquisition of rival Pendal last year and would probably cause the stock to rerate as a pure play asset manager.
Luminis Partners is working for Perpetual’s board, while Goldman Sachs and Bank of America work for the company.
Perpetual shares closed down 49c on Wednesday to $23.34.
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