Perpetual seals $2.18bn deal with KKR, chief to retire

Perpetual has agreed to divest its wealth management and corporate trust businesses to Kohlberg Kravis Roberts (KKR) for $2.18 billion, pending shareholder approval. The deal will see the departure of Perpetual chief executive Rob Adams.

The net proceeds from the sale, after accounting for the repayment of Perpetual's debt and other transaction-related costs, will be distributed to shareholders. The exact amount of these proceeds will be detailed during Perpetual's FY24 financial results announcement in August 2024.

The Perpetual board said the sale of its wealth management and corporate trust businesses offered "compelling value," and they unanimously recommended that shareholders approve the deal.

"The Perpetual board agrees that a transaction with KKR represents compelling value for shareholders and is equally a strong outcome for employees, clients, and other stakeholders," the firm announced on the ASX.

The deal is expected to finalise in February 2025, with Perpetual agreeing to provide KKR with transitional services for 18 months following its completion, with an option to extend for an additional 12 months.

Perpetual chair Tony D'Aloisio said that the board's decision to refocus as a standalone asset management firm, moving away from a complex, diversified financial services model, is expected to deliver enhanced long-term value to shareholders.

"Shareholders will benefit from cash proceeds following the separation and acquisition by KKR of our wealth management and corporate trust businesses, while also retaining ownership in a more streamlined and debt-free global asset management business," he said.

"... a separation of corporate trust and wealth management via a Scheme of Arrangement was a superior path for our shareholders compared to other options available, delivering certainty, an attractive valuation and nearer-term returns to shareholders.

"KKR offered both compelling value for shareholders as well as the highest degree of certainty in relation to the funding, execution and the ability to work with Perpetual to deliver a successful outcome."

Perpetual managing director and chief executive Rob Adams will retire after the transition is complete.

He said that the restructuring will provide each business the necessary focus and capital to expand and continue delivering world-class services and advice to clients.

"In the remaining asset management business, our shareholders will own a simpler, more streamlined, pure-play and independent global multi-boutique investment management business, with organic growth potential," he said.

"The combination of Perpetual's Australian asset management business and the acquisitions of Trillium, Barrow Hanley and Pendal, has created a high-quality global firm. As a standalone business, it will be leaner, more agile, and fully focused on enabling our highly respected investment professionals to continue to deliver strong returns to clients, whilst presenting long-term growth opportunities for our shareholders."

The existing board and executive team will stay on to ensure the benefits of the deal are fully achieved. To aid in this effort, non-executive director Gregory Cooper has been named deputy chair, focusing mainly on the asset management business.

Cooper will also head the board's sub-committee that is currently conducting a worldwide search to find a new chief executive for asset management.

Perpetual's share price sunk 7.74% on the back of the announcement.