Investors rip $9bn from Perpetual funds
Perpetual’s asset management business was a sea of red in the June quarter, recording a major fall in assets under management.
Perpetual’s asset management business was a sea of red in the June quarter with all divisions, including Barrow Hanley, J O Hambro, Pendal and Trillium, recording a fall in assets as investors ripped funds from the wealth manager.
Investors hoping for any update on the looming business split, meanwhile, were left disappointed, with the 138-year old wealth powerhouse sticking to its timeline of communicating estimated cash proceeds to shareholders at the full-year results in August.
ASX-listed Perpetual, which in May announced it would be carved up in a $2.2bn deal which will see private equity giant KKR walk away with the corporate trust and wealth businesses, on Wednesday said assets under management had fallen 5 per cent to $215bn by the end of June, down from $227.4bn at the start of the quarter.
All up, $8.9bn flowed out of its asset management funds in the three months to the end of June, including from “several institutional client redemptions”, the wealth manager said.
Perpetual shares dropped following the market update and were down more than 2 per cent in morning trade but pared the losses to close the session down 0.7 per cent at $22.60.
Negative market and currency movements, distributions, and the $9bn in outflows all contributed to the decline in total assets over the three-month period.
“The June quarter showed a mixed performance across our business divisions, with Corporate Trust and Wealth Management delivering steady performance, while Asset Management experienced a difficult quarter impacted by net outflows, markets and currency movements,” chief executive Rob Adams said.
“Our asset management business was impacted by the timing of several institutional client redemptions and short term delays in expected new institutional inflows in specific strategies, as well as softer equity markets in Australian and global indices.”
Perpetual’s J O Hambro, TSW and Trillium boutiques saw net outflows in global and international strategies over the period, while in the local market Pendal had a “challenging quarter” with outflows in cash and Australian equities following a super fund merger.
Its US-based value investment house Barrow Hanley also suffered outflows over the quarter.
Boston-based ESG specialist manager Trillium was the worst of the lot, with assets dropping 13.6 per cent to $9.4bn over the three months.
Pendal’s assets were down 8 per cent to $41bn, J O Hambro Capital lost 7.5 per cent to $37.3bn, Barrow Hanley was down 2.7 per cent to $77.2bn, and Perpetual AM’s assets fell 2.7 per cent to $20.8bn. Value investor Thompson, Siegel & Walmsley’s assets under management dropped 5.3 per cent to $29.2bn.
Assets in the soon-to-be-hived off corporate trust business were broadly flat on the prior quarter, at $1.2 trillion, while the wealth management arm — also set to go to KKR as part of the carve-up — saw net inflows, helping to offset the impact of negative markets for a 1 per cent decline in assets.
Weeks out from the full-year result, Perpetual said it expected expense growth for the year to be at the lower end of its guidance of 32 to 34 per cent growth for the financial year.
Significant items post-tax for fiscal 2024, meanwhile, are expected to be within the range of $140m to $150m.
This includes integration costs relating to the Pendal acquisition, separation and transaction costs related to the Scheme of Arrangement with KKR, costs relating to acquired intangibles amortisation, unrealised gains/losses on financial assets, as well as fair value movements on accrued incentive compensation.
The KKR deal is for total cash consideration of $2.175bn, subject to shareholder approval.
The wealth manager was whacked with hefty criticism at the time the deal was announced, with shareholders having no idea what the net proceeds from the sale would be, as separation and transaction costs, as well as a hefty capital gains tax bill, were left undisclosed.
The asset management side of the business will be left standing as a pureplay offering but current CEO Rob Adams is set to move on once the deal is done.
PPT shares were down 1.1 per cent to $22.49 per share at 11.45am AEST Wednesday.
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