The firm had initially spent a significant period of time working on a deal with private equity firm KKR to divest its wealth management and corporate trust business, but the deal was scrapped in February 2025 due to tax considerations.
At the time, Perpetual said it would continue with the business simplification plan regardless and still look to pursue a sale of its wealth management business.
In its FY2024–25 results on 28 August, chief executive Bernard Reilly said the sale of this division remains “potential”, but no decision has been made yet regarding a potential buyer. Moreover, the firm disclosed some $3.7 million has been incurred in initial costs related to the sale.
The wealth management arm currently has $21.5 billion in funds under advice, up 9 per cent on FY23–24, which includes $12.5 billion from high-net-worth investors. But underlying profit before tax for the wealth management division was impacted by the uncertainty from the sale and increased expenses, falling from $54 million to $51.5 million.
Total revenue increased 4 per cent from $226.8 million to $235.6 million, but both market and non-market lines were impacted by the uncertainty over business ownership.
“We continue to pursue the sale of the wealth management division,” Reilly said.
“Wealth management results demonstrated business resilience given the uncertainty of its ownership. Throughout the year, the team has been focused on retaining staff and delivering high-quality client services.
“Funds under advice are up 9 per cent on FY24, although largely supported by a rise in equity markets and a new institutional client win.”
Asked about the use of the word “potential” to describe the sale by an analyst on an investor call, Reilly said: “Potential is a good word to use as we focus on delivering the best outcomes for our shareholders.”
Despite the delays, it doubled down on its commitment to enacting the planned business simplification and said the sale of this arm is a strategic priority for FY25–26.
Internal simplification
With the internal simplification program underway, it confirmed a threefold strategy of simplifying the business to be more efficient, delivering operational excellence with strong client engagement and investing for growth to improve performance.
It has already achieved annualised cost savings of $44 million, ahead of its $30 million target, and targets $70–80 million by June 2027. Total costs to achieve this simplification have reduced from $70–75 million, down to $55 million.
Measures within this strategy include exploring outsourcing opportunities, delivering true-to-label investment strategies and making investment in new products and capabilities within asset management to diversify revenue.
Reilly said: “Our goal is for Perpetual to be a strong financial services group with differentiated businesses that operate with discipline to deliver improved returns for our shareholders. We need to continue to simplify, to deliver operational excellence and invest for growth.
“The [business simplification] commenced last financial year in preparation for the KKR transaction has continued and means each of our businesses are better positioned under their own leadership.”
Product development
This development of further investment capabilities within the program includes a focus on alternatives and active exchange-traded funds (ETF), which Reilly said will represent a greater proportion of its assets in the future.
With alternatives expected to grow faster than traditional assets and reach US$27.6 trillion by 2028, according to PwC, he said Perpetual is exploring opportunities such as agreements with private markets specialist Partners Group in private and public assets in Australia. It also has existing capabilities in the US with Barrow Hanley in alternative credit, which can be leveraged further into other markets.
Perpetual signed a letter of intent with global firm Partners Group in June which will see its asset management arm team up with Partners Group’s Australian operations to evaluate opportunities such as listed investment trusts, co-investments and innovative fund structures.
Reilly said: “To capture growth, it’s about having the products that clients need and desire to achieve their investment objectives. Active managers are an important participant in the future of the sector.
“We have been progressing our thinking on how to tap into growth areas such as the significant growth in alternatives and the opportunity in the active ETF space.
“Picking the areas of focus for us going forward is going to be important, but alternatives will definitely be a bigger part of the business; it will be bigger than it is today. Some 80 per cent of our underlying assets under management are in listed equities and that’s an area we need to diversify away from and alternatives are clearly a part of that.”
Regarding the possibilities in ETFs, it already has an offering in Australia but wants to expand this into North America and noted it has deliberately built out its distribution capabilities to achieve this.
“Active ETFs are entering a high-growth phase. We already have three active ETFs in Australia and our other focus is in the US market that has strong growth opportunities, and we plan to bring some of our high-performing products to market in the second half of FY26.
Asked by an analyst if this ETF development will impact its margins, Reilly responded: “In the US, it’s a different market segment for us so we see minimal impact on margins as it’s targeting a different market. But it’s no good launching products if you don’t have the distribution capabilities and so we have spent the time on building that out in North America to support those products. They won’t sell themselves so we have invested in building that capability.”
