Doomed KKR deal causes 65% fall in Perpetual profit
The failed KKR deal has caused Perpetual’s statutory net profit after tax (NPAT) to halve to $12 million for the first half of FY25.
In its results for the six months to 31 December, the firm said its NPAT was $12 million compared to $34.5 million in the first half of FY24.
The firm said the statutory results were impacted by a $25.5 million impairment in asset management as well as one-off costs associated with the KKR scheme and simplification program.
The KKR deal had first been announced in May 2024 for KKR to buy Perpetual’s wealth management and corporate trust business, but the deal ceased earlier this month due to tax concerns that it would not be in the best interests of shareholders. No break fee was payable on this, but KKR has reserved the right to seek further damages.
In progressing the strategic review and separation program, Perpetual said it had incurred transaction and separation costs of $42.6 million during the 2024 calendar year.
Nevertheless, the firm is committed to progressing its business separation and simplification program .
“Perpetual will continue to execute on the business separation program to establish standalone and more autonomous businesses, as well as implementing a new operating model for asset management and delivering on an expanded cost reduction program. Perpetual is well advanced on these initiatives which were already underway in the context of preparing for implementation of the scheme,” it said.
Revenue in the asset management division was $455 million, up 4 per cent, and total assets under management were $230 billion. It said it saw $3.4 billion in net outflows in global, international, and US equity strategies that were “greater than anticipated”, but offset by net inflows into Pendal and Perpetual.
Strategic priorities going forward for asset management are to confirm the future operating model, rightsize the cost base, reset the distribution strategy, and stabilise JO Hambro.
Wealth management funds under advice were $20.6 billion, up 8 per cent from a year ago, driven by positive equity markets. Perpetual said the firm is still progressing with the separation and proposed sale of the wealth management division despite the termination of the KKR deal.
Its simplification program is on track to deliver cost reductions of $70–80 million by FY27 via a simplified, focused asset management business and leaner central functions. So far, it has delivered $10 million in annualised cost reductions in the first half of FY25 with $30 million savings forecast for the full financial year.
CEO Bernard Reilly said: “Despite some challenges, our three high-quality businesses have delivered solid growth during the half with opportunity for future organic growth across a number of segments.
“My conviction in the quality, performance and growth opportunities across all of our businesses has only increased since I joined Perpetual. I am confident in our strategic direction and believe that focused execution of the business separation, our revised simplification program and the refreshed operating model for asset management will deliver value for shareholders.”
AUTHOR
Laura Dew
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