Perpetual readies for $225m raising, eyeing US acquisition

Perpetual CEO Rob Adams. Picture: Supplied

Perpetual Limited is positioning itself to tap the market for about $225m as early as Monday, say sources.

It is understood that a raising is on the cards to fund an acquisition based in the United States, with shares to be priced at around $30 each through a placement structure.

Shares in Perpetual last traded at $33.61.

It is understood that fund managers were wall crossed over the weekend for the raising being handled by Goldman Sachs and Bank of America.

Perpetual has been eyeing the US market for some time, with chief executive Rob Adams flagging to investors in the past that the company had been interested in a number of targets.

At the Macquarie Conference in Sydney last year, Adams indicated that Perpetual remained keen to explore opportunities for small, medium and large acquisitions.

He told investors he would look at global investment opportunities and that as a funds house, Perpetual was short on alternative investment management. An acquisition target needed to be culturally aligned and of high quality.

He has already moved on this front with the January acquisition of US-based ESG investment house Trillium. This is already paying off with the new Trillium flow helping its funds under management surge 33 per cent in the June quarter to $28.4bn.

Adams has also previously said his aim was to make the Perpetual business “more bold” in an appropriate and measured way and invest more in the Perpetual brand.

Brokerage Morgan Stanley last week moved to an “overweight” position on Perpetual and upped its price target to $45 a share, saying the financial services group is turning around its funds flow in asset management and while Trillium has allowed it to bulked up on its crucial ESG offerings.

“Perpetual retains a strong balance sheet and appetite for further global M&A. We think this transformation will further improve asset management flows,” Morgan Stanley said. The brokerage argues that Perpetual has more diversity than other Australian fund managers.

Despite the expansionist push, Perpetual’s Adams remains in cost cutting mode. He recently submitted to a 20 per cent pay cut for the next six months as part of efforts to slash costs through the COVID-19 crisis as revenue is squeezed by recent market volatility.

The rest of Perpetual’s executive team and board would also have their salary and board fees cut by 10 per cent for the same amount of time and there would be no cash bonus for the group executive team for fiscal 2020.