PPT
Perpetual Limited
ASX
Investor Presentation - Strategic Review
Sentiment:
Strategic Review Announcement
7 May 2024 8:35 PM
Perpetual Limited will separate its three businesses, selling the Wealth Management and Corporate Trust divisions to KKR for A$2.175 billion, creating a standalone, debt-free asset management business.
Better than expected
The strategic review resulted in a cash offer that the board considers superior to other alternatives.
The transaction unlocks significant value for shareholders through the sale of Wealth Management and Corporate Trust at attractive multiples.
Summary
- Perpetual Limited has completed a strategic review, deciding to separate its three businesses.
- KKR will acquire the Wealth Management and Corporate Trust businesses for A$2.175 billion in cash.
- The transaction values these businesses at 13.7x LTM EBITDA and 16.3x LTM EBIT as of December 31, 2023.
- Perpetual will become a standalone, ASX-listed, global multi-boutique asset management business with no debt.
- The Board of Perpetual recommends shareholders vote in favor of the Scheme of Arrangement, pending an Independent Expert's assessment.
- The strategic review, initiated on December 6, 2023, aimed to unlock shareholder value and streamline the asset management business.
- The asset management business has A$227 billion in AUM as of March 31, 2024.
- Shareholders will receive cash proceeds and continue to own shares in the asset management business via a demerger.
- The Scheme Booklet, containing transaction details, is expected to be released in late 2024.
- Rob Adams, Perpetual's Group CEO and Managing Director, will retire upon completion of the transaction.
Sentiment
Score: 8
Explanation: The document conveys a positive sentiment due to the successful completion of the strategic review, the attractive valuation achieved in the sale, and the creation of a focused, debt-free asset management business. The board's recommendation for shareholder approval further reinforces this positive outlook.
Highlights
- KKR will acquire Perpetual's Wealth Management and Corporate Trust businesses for A$2.175 billion.
- The sale represents a valuation of 13.7x LTM EBITDA and 16.3x LTM EBIT as of December 31, 2023.
- Perpetual will become a debt-free, standalone asset management business with A$227 billion in AUM as of March 31, 2024.
- The Board recommends shareholders approve the Scheme of Arrangement.
- Rob Adams, Perpetual's Group CEO and Managing Director, will retire on completion.
Positives
- The A$2.175 billion cash offer provides immediate cash proceeds to shareholders.
- Shareholders retain ownership in a streamlined asset management business.
- The separation removes conglomerate complexity, potentially improving market valuation.
- The asset management business will be debt-free.
- The transaction unlocks significant value for Perpetual's shareholders.
Negatives
- Rob Adams, Perpetual's Group CEO and Managing Director, will retire upon completion of the transaction, requiring a search for a new CEO.
Risks
- The Scheme of Arrangement is subject to shareholder vote, regulatory approvals, and court approval.
- The transaction is contingent on no material adverse change or prescribed events.
- The Independent Expert must conclude that the Scheme is in the best interests of shareholders.
Future Outlook
Perpetual will be a standalone, debt-free, global multi-boutique asset management business positioned for organic growth. The executive and board will focus on implementation in the coming months.
Management Comments
- The proposal is superior to alternatives, in terms of price and deliverability.
- The cash offer provides the dual benefits of delivery of cash proceeds to our shareholders immediately upon completion and continued ownership of an asset management business which is better positioned to improve performance.
- A separation of Perpetual's businesses removes the conglomerate complexity which has made it challenging for the market to value Perpetual Group.
- Rob Adams, Perpetual's Group CEO and Managing Director, has decided to retire on completion.
Industry Context
The transaction reflects a trend towards specialization and simplification in the financial services industry, with companies focusing on core competencies. Multi-boutique asset management models are increasingly popular, allowing firms to offer a diverse range of investment strategies.
Comparison to Industry Standards
- The valuation of 13.7x LTM EBITDA for the Wealth Management and Corporate Trust businesses is within the range of comparable transactions in the financial services sector.
- KKR's AUM of US$578 billion positions it as a major player in the global asset management industry, comparable to firms like Blackstone and Apollo Global Management.
- Perpetual's A$227 billion in AUM for its asset management business places it among the larger ASX-listed asset managers, competing with companies like Magellan and Platinum Asset Management.
Stakeholder Impact
- Shareholders will receive cash proceeds and retain ownership in a streamlined asset management business.
- Employees in the Wealth Management and Corporate Trust businesses will transition to KKR.
- Clients of the asset management business will continue to be served by Perpetual's multi-boutique brands.
- The debt-free balance sheet strengthens the asset management business's financial position.
Next Steps
- Obtain required regulatory approvals.
- Obtain an Independent Expert Report.
- Seek Perpetual shareholder approval of the Scheme.
- Obtain Court approval of the Scheme.
- Release FY24 results and announce estimated cash proceeds to shareholders in August 2024.
- Send Scheme Booklet to shareholders in late 2024.
- Hold a Scheme Meeting for shareholders to vote on the transaction in late 2024.
- Complete the transaction in January 2025.
- Recruit a new CEO for the Asset Management business.
Key Dates
- December 6, 2023: Strategic Review announced
- December 31, 2023: LTM EBITDA and EBIT used for valuation
- March 31, 2024: KKR AUM reported
- March 31, 2024: AUM of asset management business reported
- April 30, 2024: Gross debt was A$771 million
- May 2024: Strategic Review completed and outcome announced
- August 2024: Announcement of estimated cash proceeds to be paid to shareholders; Announcement of FY24 results
- October 2024: Annual General Meeting for shareholders
- Late 2024: Scheme Booklet sent to shareholders
- Late 2024: Targeted Scheme Meeting for shareholders to vote on the transaction
- January 2025: Expected Completion of transaction
- December 31, 2025: Perpetual Group as the parent ASX listed entity, will rebrand and become a new and focused multi-boutique, asset management business
Keywords
PPT
Perpetual Limited
ASX
Sector: Financial Services
Filings with Classifications
Worse than expected
14 April 2025 6:55 PM
Quarterly Business Update
- Asset Management AUM decreased by 4% to approximately A$221 billion, indicating worse than expected performance in this segment.
Worse than expected
26 February 2025 4:57 PM
Half Yearly Report and Accounts
- The NPAT was significantly lower than previous periods due to significant items including impairment losses, indicating worse than expected results.
Worse than expected
26 February 2025 4:56 PM
Half Yearly Report and Accounts
- The net profit after tax attributable to equity holders of Perpetual Limited decreased to $12.0 million from $34.5 million year-over-year.
Delay expected
26 February 2025 4:56 PM
Half Yearly Report and Accounts
- The Scheme Implementation Deed with KKR for the sale of Wealth Management and Corporate Trust businesses was terminated after receiving unfavorable views from the ATO and an adverse report from the Independent Expert.
Worse than expected
26 February 2025 4:54 PM
Half Year Results
- The statutory NPAT decreased significantly due to significant items and an impairment in Asset Management, indicating worse than expected results.
Worse than expected
23 February 2025 5:35 PM
Company Update
- The termination of the Scheme of Arrangement with KKR is worse than expected as it represents a failed transaction and incurs significant transaction and separation costs.
Worse than expected
16 December 2024 4:59 PM
Transaction Update
- The Independent Expert's inability to support the deal due to potential tax liabilities is a worse outcome than expected.
Delay expected
9 December 2024 4:40 PM
Scheme Update
- The document indicates a delay in the finalisation of the transaction due to ongoing engagement with the ATO regarding the tax treatment.
Worse than expected
9 December 2024 4:40 PM
Scheme Update
- The potential for a A$488 million tax liability is significantly worse than expected.
- The ATO's position that the entire cash proceeds could be deemed an unfranked dividend is worse than expected.
- The uncertainty surrounding the transaction due to the ATO's stance is worse than expected.
Worse than expected
25 November 2024 1:17 AM
Shareholding Change Notice
- The reduction in Perpetual Limited's shareholding in Kina Securities Limited indicates a negative market sentiment or a strategic decision by the investor to divest from the company.
Worse than expected
21 November 2024 12:33 AM
Change of Substantial Holding Notice
- The decrease in Perpetual Limited's voting power in Healius Limited from 14.505% to 13.467% indicates a reduction in their stake, which is worse than maintaining or increasing their holding.
Worse than expected
18 November 2024 12:49 AM
Substantial Holder Notice
- The results were worse than expected because Perpetual Limited decreased its stake in Infomedia Limited, indicating a potential loss of confidence in the company's future prospects.
Worse than expected
17 October 2024 12:43 AM
Annual General Meeting Results
- The failure of the remuneration report and the election of a non-board endorsed director candidate represent worse-than-expected outcomes for Perpetual Limited.
Worse than expected
16 October 2024 6:54 PM
Annual Report
- Despite overall revenue and profit growth, significant net outflows from the Asset Management division were worse than anticipated, leading to a substantial impairment charge and impacting the final dividend.
Delay expected
16 October 2024 6:54 PM
Annual Report
- The timeline for the shareholder vote on the KKR scheme is subject to regulatory approvals and finalization of tax and duty discussions, potentially causing a delay from the initial target of early 2025.
Better than expected
16 October 2024 5:16 PM
Quarterly Business Update
- The 3% increase in AUM to A$222 billion exceeded expectations, driven by positive market movements and net inflows.
Delay expected
12 September 2024 6:43 PM
Sustainability Report
- The development of a cultural diversity target was paused due to the Strategic Review and potential separation of the Wealth Management and Corporate Trust businesses.
- Some community giving activities were paused due to reduced bandwidth resulting from the Strategic Review.
Worse than expected
12 September 2024 6:43 PM
Annual Report
- While UPAT increased, a significant non-cash impairment charge and other significant items resulted in a statutory net loss, indicating worse-than-expected results.
Delay expected
12 September 2024 6:35 PM
Annual General Meeting Notice
- The allocation of the LTI award to the new CEO is contingent upon the completion of the transaction, which could cause a delay in the award's allocation.
Worse than expected
12 September 2024 6:35 PM
Annual General Meeting Notice
- The statutory net loss after tax of A$472.2 million was significantly worse than expected due to substantial non-cash impairments and other significant items.
Worse than expected
23 July 2024 7:01 PM
Quarterly Business Update
- Asset Management AUM decreased by approximately 5% to A$215 billion, impacted by net outflows, market movements, and currency fluctuations.
Better than expected
7 May 2024 8:35 PM
Strategic Review Announcement
- The strategic review resulted in a cash offer that the board considers superior to other alternatives.
- The transaction unlocks significant value for shareholders through the sale of Wealth Management and Corporate Trust at attractive multiples.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.