A number of private equity firms have come out of the woodwork in a quest to gain control of Perpetual’s assets, sources say, with Kohlberg Kravis Roberts, Pacific Equity Partners, EQT and Partners Group believed to be among them.
It comes after the $2.9bn Perpetual announced it was launching a review into whether it should spin off its corporate trust and wealth management arms last week. The listed asset management company had previously been reluctant to do so.
It later emerged that only weeks earlier, on November 21, a scrip offer had arrived from its 9.9 per cent shareholder, Washington H. Soul Pattinson, to buy the business for a price they said would value it at $3bn, but it was rejected.
Shareholders are likely to support the Perpetual board’s decision. There are a high number of retail investors on the register, and they typically back a company’s stance in corporate activity.
The private equity firms were known to be keen to buy the corporate trust unit of Perpetual before, but were rebuffed by the company.
Despite the tough economic conditions and high cost of debt, buyout funds are lining up to make fresh offers.
It will be interesting to see if the Apollo-backed Challenger Financial also takes a look, after weighing an acquisition of the corporate trust unit in the past, while Macquarie may like Perpetual’s private client business, and Carlyle could be another contender.
Meanwhile, market sources say that many of Perpetual’s corporate trust clients would be likely to leave if Soul Patts bought the business, given it is a less experienced player.
Regal Funds bid for the business with EQT after EQT had made a separate offer for the corporate trust unit, while Partners Group offered about $1.5bn.
Soul Patts claimed its offer would ascribe a value of $1.885bn to the corporate trust unit, while it would give the asset management arm to investors.
Analysts at Bell Potter say the market has been valuing the business at $1.4bn.
Most believe a cash offer will be needed.
Soul Patts says its offer represents a value of $27 a share and a total enterprise value of $3.5bn, a 28.6 per cent premium to the Perpetual share price on November 13 of $21.
Shares on Friday closed at $25.70, up 1.4 per cent.
The ideal outcome for Perpetual could be a global strategic player buys the business.
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