Perpetual promises punter payout as chair Tony D’Aloisio sells $2.18b trustee, wealth deal with KKR

Perpetual is to focus on its funds management business after confirming US private equity group KKR is buying its corporate trustee and wealth advisory arms in a $2.18 billion deal.

Perpetual told the stock exchange on Wednesday that KKR would acquire the divisions through a scheme of arrangement that requires approval from the Sydney-based group’s shareholders.

Unveiling a deal that comes after a decade of share price weakness, Perpetual chair Tony D’Aloisio said making the company a stand-alone asset management business would provide better long-term value for shareholders.

Mr D’Aloisio said it was difficult for the market to value a “complex diversified financial services conglomerate”.

“The board determined that a separation of corporate trust and wealth management via a scheme of arrangement was a superior path for our shareholders compared with other options,” he said.

Perpetual’s funds management arm has been leaking investors since its acquisition last year of rival Pendal, which was formerly known as BT Investment Management and a subsidiary of Westpac.

Perpetual chief executive Rob Adams will retire after the business changes have been bedded down. The sale to KKR is expected to be completed in February next year, while Perpetual shareholders are not likely not be voting until January.

KKR deal was confirmed as Perpetual released a detailed strategic review of its sprawling operations built through an array of takeovers and deals since the group’s founding in 1886.

The ASX-listed company confirmed KKR would take ownership of the Perpetual name, but the remaining asset management business would have a seven-year licence to use the brand.

Perpetual has agreed to provide transitional services to KKR for 18 months after the corporate trustee and wealth management division sales finalised. There is an option for a 12-month extension of the services agreement.

The company’s shareholders are to receive a distribution from the net proceeds of the $2.18b deal.

The amount available for distribution to shareholders will be determined after the payment of group debt, business-specific debt and various separation and transaction costs.

Perpetual shares were down $1.87 at $22.17 in early afternoon trade.