Perpetual expected to pick Barrenjoey to advise on sale

The sale of wealth management will reduce Perpetual’s debt which is currently 569m.

Barrenjoey is believed to be in the box seat to win a role as Perpetual’s investment banking adviser as it gears up to offload its wealth-management unit.

It comes after the $2.2bn Australian listed asset manager that also has a wealth and corporate trust unit sent out a request for investment banks to pitch for the sale mandate.

Sources believe that Barrenjoey is set to be appointed.

The understanding is that a sale process is likely to get under way in about three months’ time.

Goldman Sachs, Bank of America and Luminis Partners were involved in a strategic review that resulted in Perpetual’s attempt to sell its Corporate Trust unit to Kohlberg Kravis Roberts.

Goldman Sachs advised on its $2.5bn buyout of rival Pendal and defended it against subsequent inbound offers from Regal, EQT and Soul Patts.

Bank of America was brought in later, while Luminis advised the board.

Since a sale was originally agreed to for the Corporate Trust unit in May last year, Perpetual has appointed a new chief executive, Bernard Reilly, and chairman Greg Cooper.

Perpetual announced it would put its wealth-management unit up for sale after telling the market that KKR had abandoned plans to buy the Corporate Trust arm for $2.2bn.

The deal fell over after it emerged the tax bill on the sale would be $493m to $529m – far higher than the $106m-$227m that the company earlier estimated.

As a result, shareholders would have received between $5.74 and $6.42 per share rather than $8.38 to $9.82.

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

Sources believe that FirstCape, Oaktree Capital Management and TA Associates will be interested, while wealth managers Koda Capital and Crestone are not to be discounted.

The unit is expected to sell for between $500m and $1bn.

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

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

Following a sale of the wealth unit, Perpetual is expected to demerge its corporate trust arm.

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.

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