Pendal boss Nick Good travelling to Australia to join Perpetual deal bunker

Pendal’s CEO is en route to Australia from the US to help lead the funds management group’s deliberations on a $2.4bn tilt for the company by Perpetual.

Pendal CEO Nick Good is making his way to Australia to join the company’s deal bunker.

Pendal chief executive Nick Good is en route to Australia from the US to help lead the funds management group’s deliberations on a $2.4bn tilt for the company by Perpetual.

Mr Good — who is usually based in Boston — will also arrive ahead of Pendal’s latest quarterly funds under management update which is expected to lob next week. The fund flow results — across Australia, the US and a third region which includes Europe, the UK and Asia — will be closely watched by investors and analysts.

Pendal’s board is yet to make a definitive statement about Perpetual’s indicative scrip and cash bid, which was delivered to the target late on Friday, Sydney time.

In its initial statement on the offer the Deborah Page-led Pendal board said it was assessing the transaction, but noted the bid came against the backdrop of immense disruption in global markets linked to geopolitical instability, Covid-19 and valuation volatility.

“This has materially impacted the trading values of global asset managers which may not currently reflect their long-term potential,” the statement added.

The bid was pitched at one Perpetual share for every 7.5 Pendal shares plus $1.67 cash. The offer reflected a premium 39.2 per cent to Pendal’s closing share price on Friday, but just a 0.3 per cent premium to the stock’s volume-weighted average price for the 180 days prior to April 1.

Investors and analysts believe Perpetual may opt to lift the cash component of its offer, but the ball remains in Pendal’s court until the target board stipulates its position.

Pendal is due to provide a quarterly funds under management update next week and that will also feeding into deliberations of the deal’s merits. The firm’s last update — for the December quarter — showed hefty outflows of $6.8bn, including two “notable redemptions” by UK institutional customers.

At the time, Mr Good said Pendal was responding to the “disappointing quarter” and would continue to invest in distribution while also strengthening investment performance.

Pendal’s total funds under management sat at $135.7bn for the December quarter, down on $139.2bn in the prior three months. As at December 31, Perpetual’s asset management divisions housed $102.8bn.

Perpetual is slated to provide its own quarterly funds management update in the second half of April.

On Wednesday, Pendal’s shares declined 1.7 per cent to close at $5.28, just shy of Monday’s closing price but well above Friday’s pre-bid close of $4.48. Perpetual’s stock rallied 1.3 per cent to $32.80 on Wednesday, although it remains well below Friday’s close of $34.23.

Morningstar analyst Shaun Ler said he didn’t think Perpetual’s bid for Pendal would proceed on current deal terms.

“Pendal shareholders should just await a better offer,” he added, referring to a higher bid from Perpetual or the Pendal board and its advisers eliciting a competing offer for the company.

Morningstar’s fair value estimate for Pendal is $8.50, while for Perpetual it has $43.

Perpetual’s mooted takeover proposal hands Pendal 48 per cent of the combined group.