Perpetual chair departs as wealth group swings to $472m loss

The wealth manager has finally told shareholders the expected proceeds from its $2.2bn carve-up deal with KKR and says it is looking at alternative options if the deal fails to go ahead.

Perpetual’s outgoing CEO Rob Adams. Picture: Nikki Short

Perpetual is considering alternative options in the event its $2.2bn carve-up deal with KKR fails to get the go-ahead from shareholders.

Speaking to analysts after handing down a $472.2m loss for the full year and announcing that long-serving chairman Tony D’Aloisio will retire, outgoing chief executive Rob Adams said the board and management didn’t see any benefit in keeping the asset management, corporate trust and wealth management businesses together and was trying to unlock value for shareholders by separating them.

“Given the size, shape and form of each of those businesses, we didn’t see any benefit in them being together, so were operating them increasingly separate, and that would continue to be the path we take,” Mr Adams said.

“Each of those three businesses are high quality, but in the wrapper of Perpetual we haven’t felt the value has been unlocked.”

If the transaction did not go ahead, Perpetual would still push forward with the aim of “ensuring the value is recognised by the market”, including by potentially making “an alternative decision down the track”, he added.

Chief financial officer Chris Green backed up Mr Adams’ comments that the board was looking at alternative options. “Contingency plans are being considered by management and the board, but our focus at the moment is getting the transaction done. We believe it’s in the best interest of shareholders and is compelling for them,” Mr Green said.

The deal to hive off the corporate trust and wealth management businesses, as well as the Perpetual name, to KKR, was heavily criticised when announced in May, in part because the firm was unable to give shareholders an estimate of the proceeds from the transaction.

On Thursday shareholders were finally given some further detail on the deal: “Based on a number of assumptions and opinion of our external advisers, estimated net cash proceeds from the transaction are expected to be in the range of $8.38 to $9.82 per share,” Perpetual said.

But the wealth manager said it was still engaging with tax authorities to confirm the tax implications of the transaction, with no timeline on when this would be completed.

For the 12 months through to June 30, Perpetual posted a loss of $472.2m due to a writedown on asset managers J O Hambro and Thompson, Siegel, & Walmsley, as well as Pendal integration costs and strategic review costs.

Perpetual went on a buying spree in recent years, acquiring rival Pendal in early 2023. J O Hambro and TSW were part of Pendal’s portfolio and saw outflows of $12bn through the year.

Perpetual said deputy chairman Gregory Cooper would replace Mr D’Aloisio, who has faced strong criticism from shareholders over the wealth manager’s acquisitions and the move to break up the wealth manager.

Underlying profit came in at $206.1m, 26 per cent higher than the prior corresponding period, boosted by stronger earnings in both wealth management and corporate trust divisions.

Operating revenue for the year was $1.3bn, a 32 per cent lift on fiscal 2023.

“Perpetual’s full-year 2024 financial performance reflected the increased scale of our asset management business and the continued growth in both our wealth management and corporate trust businesses,” Mr Adams said.

“In asset management, while we have seen some of the positive impact of the incorporation of Pendal Group into our business, our performance in fiscal 2024 was impacted by larger-than-anticipated net outflows, which was clearly disappointing,” he added.

Mr Adams leaves Perpetual on September 2, with former Australian Retirement Trust CEO Bernard Reilly set to step into the CEO role.

Within the asset management division, total assets under management rose 1 per cent to $215bn. Mr Adams said he was confident in the outlook for the business, despite the headwinds facing the broader sector.

Total expenses, meanwhile, rose to $1bn from $800m. Expense growth guidance for the current year was between 2-4 per cent growth in total expenses, Perpetual said.

The board declared a final dividend of 53c per share, 50 per cent franked, and said it would reconsider its payout ratio once the asset management division was a standalone business.

Perpetual shares closed 3.78 per cent lower at $19.86.