‘Only in quarter time’: Perpetual CEO reflects on Pendal integration
Perpetual chief executive, Rob Adams, has refuted comments that the acquisition of Pendal has been a failure as it reports a 48 per cent rise in outflows in the first half of 2024.
In its results for the six months to 31 December, the firm said it saw net outflows of $4.3 billion compared to net outflows of $2.9 billion in the first half of 2023, a rise of 48 per cent.
Some $2.1 billion came from its US equities products and $1.4 billion came from global and international equities ones.
On an analyst call, Adams was asked whether the acquisition of Pendal plus earlier ones of Trillium and Barrow Hanley had been “failure” given the flows status.
He said: “For Pendal, we are only 12 months in and the strategic rationale for the acquisition is as true today as it was on the day of the announcement. It has been a difficult period of time for parts of the acquired business and we are well aware of that and focused on improving that performance.
“We are only in quarter time, it is not full-time yet.”
The acquisition of Pendal and its affiliates was completed in January 2023, and Adams said Perpetual is on track to realise $80 million in run-rate synergies in January 2025. It has already exceeded the targeted $40 million in synergies in the first year.
Referencing the challenging time, he repeated it has been the worst in 15 years for active management as outflows were predominantly seen across its US and global equities strategies managed by UK-based J O Hambro Capital Management and US-based TSW, both active management affiliates of Pendal.
“The environment in the UK market was one of the worst in 15 years for net flows, active managers are not finding it straightforward. There are some businesses there which are winning, but the winners are far outweighed by those companies in net outflows. It is a difficult backdrop.”
Wealth management funds under advice (FUA) was $19.1 billion, 7 per cent higher than in the first half of 2023. This was underpinned by positive net flows, investment performance and improving equity markets.
It noted it has seen strong organic growth across the business particularly in the high-net-worth advice segment.
Wealth management and the firm’s corporate trust business are subject to a strategic review, however, as the firm repositions to focus on asset management following the Pendal acquisition.
At the end of 2023, the firm announced it had rejected a $3 billion takeover bid from Washington H. Soul Pattinson.
It made a non-binding indicative offer to acquire 100 per cent of Perpetual via a scheme of arrangement, conditional upon a demerger of Perpetual’s asset management business. WHSP is already a Perpetual shareholder with a 9.9 per cent stake.
However, Perpetual rejected the deal as it felt it “materially undervalues” the firm’s various business divisions and would not be in the best interest of Perpetual shareholders.
AUTHOR
Laura Dew
Recommended for you
Grant Hackett has been promoted from CEO of Generation Life to head up the wider Generation Development Group.
Tribeca Investment Partners has made a distribution hire from Australian Ethical in a newly-created role focused on the national intermediary market.
Asset managers may be urged to diversify their product ranges, but investment executives have warned any M&A deal should avoid simply filling gaps and instead consider long-term value creation.
Specialist wealth platform provider Mason Stevens has become the latest target of an acquisition as it enters a binding agreement with a leading Sydney-based private equity firm.
