Perpetual hit with double whammy redemption, impairment

Perpetual's earnings will be slugged with a massive impairment thanks to an unnamed client redeeming nearly $6.5 billion (US$4.6bn) from a strategy run by Thompson, Siegel & Walmsley LLC (TSW).

Perpetual said it was notified last week of the client's intention to take out its investment in TSW's International Equity strategy, with the full redemption expected to occur before the end of the calendar year.

The non-cash impairment charge is expected to be $63.5 million against the carrying value of goodwill for TSW.

"While notification of the future redemption was received after 30 June 2026, the impact and associated impairment charge was deemed an adjusting item and will therefore be recognised as a significant item in Perpetual's FY26 statutory results," the company said.

Perpetual first flagged expected significant items for FY26 in its fourth-quarter business update on July 29 but had not yet completed year-end impairment testing for goodwill and other intangible assets within its Asset Management division.

In 2021, Pendal acquired the Virginia-based value-orientated investment manager TSW for $414 million.

Two years later, Perpetual formally acquired Pendal, which also owned global fund manager J O Hambro Capital Management (JOHCM).

The group currently has $227.5 billion in assets under management.

Perpetual assured investors the impairment is non-cash and does not affect its liquidity, compliance with its banking covenants or impact underlying profit after tax - the financial metric on which the dividend payout ratio is determined.

The charge remains subject to completion of the FY26 audit process and finalisation of the company's financial statements.

Perpetual will release in its FY26 results on August 27.

The financial services group recently rejected EQT's $22.50 share takeover proposal, saying it does not reflect the value of the business.

Perpetual chief executive and managing director Bernard Reilly said the group delivered another quarter of growth while progressing the planned sale if its wealth management division to Bain Capital.