Perpetual raises, buys 75pc of US fund manager Barrow Hanley

Perpetual CEO Rob Adams. Picture: Supplied

Perpetual will undertake an equity raising and acquire a 75 per cent stake in US asset manager Barrow Hanley for $US319 million ($A465m).

In an update to the ASX, the investment manager also flagged a firmly lower statutory net profit figure for the full year of $82m, down from $115.9m the prior year.

Underlying profit after tax was expected to be $93.5m, Perpetual said.

Perpetual said it would consider the payment of a final dividend under its existing payout policy of 80-100 per cent of statutory net profit on an annualised basis.

The raising announcement, foreshadowed by The Australian’s DataRoom, includes a $225m fully underwritten institutional placement plan as well as a non-underwritten share purchase plan targeting to raise up to $40m.

The proceeds from the equity raising will help fund the acquisition of Dallas-based Barrow Hanley, as well as provide Perpetual with provide greater financial flexibility and purse other identified growth opportunities.

The Barrow Hanley deal is expected to more than triple Perpetual’s funds under management from $28.4 billion to $92.3bn and will add 21 key new strategies across asset class and geographies, the company said.

Barrow Hanley has about $US44.1bn in funds under management, with a presence in London and Hong Kong.

“This is a compelling acquisition,” chief executive Rob Adams said.

“It provides Perpetual with world-class investment teams, diversifies our client base by sector and geography, and presents us with significant growth opportunities in the Australian market and a formidable platform to scale our business internationally.

“Barrow Hanley has a 40-year track record of value investing with a highly regarded brand, an experienced and invested management team and a broad, blue-chip, institutional client base; many of whom have been with the company for more than 20 years.”

The deal is expected to be completed by the end of the first half this financial year, subject to regulatory and other approvals.

Perpetual intends to change its future dividend policy to reflect the material impact of the Barrow Hanley acquisition on its statutory earnings profile.