KKR in play for Perpetual’s wealth arm

Perpetual has confirmed it is in talks with US private equity giant KKR to acquire its corporate trust and wealth management business.

The Australian Financial Review reported over the weekend that KKR had entered into exclusive talks, forcing the ASX-listed wealth management firm into a trading halt on Monday morning before the market opened.

An update to the ASX on Monday morning responding to the media reports said there was no certainty of reaching a binding agreement or that any transaction would proceed.

The exclusivity of the deal would expire on Tuesday, 7 May 2024, with a further update the following day when Perpetual will provide a detailed update on the strategic review being conducted by the business.

Perpetual shares rose 3.13 per cent to $24.03 at close of market on Monday afternoon.

In its quarterly business update last week, Perpetual said the wealth management arm held $20 billion in funds under advice as of the end of March.

It’s not the first major foray by KKR into Australia’s wealth management sector – the private equity firm acquired a 55 per cent stake in CFS from Commonwealth Bank in 2020.

That investment included a $430 million injection of cash to modernise the CFS platforms, which led the development and production of Edge.

Perpetual acquired Pendal in the second half of 2022, with the two ASX-listed fund managers combining to create a $200 billion entity, doubling the former’s assets under management.

The move was a sign of the times with active managers facing headwinds of underperformance during the Covid-19 pandemic, the loss of distribution from financial advisers, super funds turning to more to internal investment management, the rise of lower fee passive ETFs, and adviser popularity of managed accounts.