Fund managers revolt over sale of wealth management in Perpetual-KKR deal

Senior figures in Sydney’s funds management community are backing a bid by career investor Rodney Forrest for a board seat at investment house Perpetual.

Sublime Funds Management director Rodney Forrest.

Senior figures in Sydney’s funds management community are backing a bid by career investor Rodney Forrest for a board seat at investment house Perpetual, as it considers a $2.2bn deal that will see it dump its name and wealth management business.

Mr Forrest has told The Australian he intends to make a run for a board seat at Perpetual when nominations open, warning the company’s move to sell its name and split its business was a ­“disaster”.

“Throwing away the name of a 140-year-old institution, that is the veins of the Australian funds management industry, is a travesty,” he said.

Mr Forrest said the $2.2bn deal, in which Perpetual will sell its wealth management and corporate trust businesses to private equity raiders KKR, would see Perpetual’s board give away its brand.

“The industrial fund has the longest investment track record of any share fund in the country. It spans generations and will be lost with sale of the name to KKR,” he said.

“Whilst they achieved a great price for asset, the brand value has not been conveyed. This brand deal is madness. Funds management cannot lose the brand.”

Under the deal, Perpetual will be forced to rebrand its asset management business by December 2025.

Mr Forrest said two Perpetual directors, Nancy Fox and Ian Hammond, had been on the board for nearly 10 years, after both joined in 2015.

“In accordance with AICD guidelines on tenure length, both should step down. I am putting my hand up and saying things need to change,” Mr Forrest said.

Nominations are set to open in August ahead of a vote on the KKR deal in January.

Former Perpetual fund manager Paul Skamvougeras.

Mr Forrest will make his tilt at the board with the backing of several of Perpetual’s former rainmakers.

“I owe it to my late father to pursue this. I look up to the investing greats that have walked the halls of Perpetual and shaped my investing journey,” he said.

Mr Forrest’s move on Perpetual comes as the community of Perpetual alumni shared their disgust with the deal, with phones running hot over the weekend.

Industry analysts have already taken aim at the proposal, with MST Financial’s Lafitani Sotiriou branding the deal a “joke”.

“Perpetual has more Hall of Fame Investors than any other institution,” Mr Forrest said.

“That has value and should be recognised and respected.”

Perpetual’s long-serving head of equities, Paul Skamvougeras, took aim at the deal in a post on social media, questioning suggestions the sale was “part of the grand plan”.

“Making ill-timed, debt-fuelled and dilutive acquisitions and then being forced to sell part of the business to the “Barbarians at the Gate”. Along with the best brand name in Australian funds management?” he said.

Mr Skamvougeras resigned from Perpetual as the firm prepared to close its deal with Pendal, in what was widely seen as a sign of disapproval from the value investment heavyweight. Mr Forrest said he was making a tilt for Perpetual’s board as they did not have any skin in the game.

“The Perpetual board collectively owns only $1.6m of Perpetual stock but it is called alignment in the annual report. That is ridiculous,” he said.

“The CEO should also not get paid out the $5m in share rights if the deal happens. The share price has halved during his tenure, and he presided over a forced asset sale.”

Mr Forrest currently runs his own family office, Sublime Funds Management, after a career in funds management, most recently spending several years at Kerr Neilson’s family office.

Mr Forrest paid tribute to Mr Nielson, noting the funds management titan had “taught me businesses are a living organism, not numbers”.

“Are the leaders walking the floor talking to the people and asking whether Perpetual should sell its name? Are they confident they can retain their people?” he said.

“The board has not addressed any of this in speaking to the market. It all seems poorly executed.” Industry sources have said Perpetual appeared rudderless after chief executive Rob Adams signalled he would exit the company.

Perpetual is already sounding out successors to Mr Adams, who steered the funds management giant to its ill-fated $2bn acquisition of rival Pendal last year.

Industry sources said the company had spoken to Challenger boss Nick Hamilton.

It is the second time since 2011 that the Sydney funds community has put its heads together over the future of Perpetual.

Perpetual faced a number of private equity overtures in 2011 after the resignation of CEO David Deverall, who sounded out potential leaders for the firm.