Perpetual quietly bid for Pendal Group a year ago – but the target still isn’t listening

Perpetual CEO Rob Adams.

Australian listed fund manager Perpetual is understood to have made a play for Pendal about 15 months before its latest $2.4bn bid for its rival.

DataRoom understands that confidential talks unfolded between the pair months before Pendal made Perpetual’s buyout proposal for its business public last week.

Yet it is understood that Pendal is yet to engage in any meaningful way with Perpetual after it put forward its $6.23-per-share cash and scrip bid for the business.

Sources say that top fund managers at Pendal are in support of the offer, yet the board is yet to engage with Perpetual over what terms may be acceptable.

It comes at a time that Pendal has been losing funds under management and suffering from a reduction in performance fees as some question its future strategy.

One theory is that Pendal is not engaging with Perpetual to buy itself time to find another suitor.

It is understood that investment bank Barrenjoey has been scanning the market, in search of a rival suitor.

Meanwhile, Pendal’s defence adviser Macquarie has been speaking to parties about their interest in making a bid for the business.

Sources believe that Macquarie has taken Pendal to about five private equity firms, but the understanding is that their stronger interest is in launching a Perpetual bid.

However, for a few firms, it is too expensive.

DataRoom reported last year that Perpetual was in the crosshairs of a suitor, believed to be a private equity firm.

Perpetual, advised by Goldman Sachs, has made much of the $50m worth of run-rate pre-tax annual synergies by bringing the two groups together.

Janus Henderson has been discussed as a potential bidder.

However, some believe it is unlikely to show interest while it has an interim chief executive in place.

It also already has a major presence in North America and Europe where Pendal operates, and would be unable to extract the same synergies as in a Perpetual tie-up.

Aberdeen Asset Management could extract some synergies but not to the same extent as Perpetual.

Pendal on Monday said that it was still considering the proposal, but pointed out that the timing was opportunistic.

Some observers believe that for the offer to be successful, Perpetual would need to boost the bid by 10 per cent and increase the cash component, possibly to about $1bn.

Perpetual is offering Pendal shareholders one Perpetual share for every 7.5 Pendal shares plus $1.67 of cash for each Pendal share, for 48 per cent of the merged entity.

The offer is a 0.3 per cent premium to Pendal’s volume-weighted average share price for the 180 days before April 1.