Perpetual saw its assets under management (AUM) grow 3.6 per cent in the three months to December 2024 to $230.2 billion.
In its 2Q25 business update released on Thursday, the financial services firm attributed the rise to positive market movements of $15.8 billion, offset by net outflows of $3.8 billion and negative market movements of $4.1 billion.
Namely, Barrow Hanley’s AUM rose 8.4 per cent over the quarter to $85.1 billion, although Perpetual noted that net outflows of $400 million primarily stemmed from large cap value equities and emerging markets strategies.
J O Hambro Capital Management’s AUM fell 0.9 per cent to $37.1 billion, driven by net outflows of $2.1 billion and negative market movements of $900 million. Meanwhile, Pendal’s AUM slumped 1.7 per cent to $44.7 billion and Perpetual Asset Management’s increased by 1.7 per cent to $22.1 billion.
Trillium and TSW saw AUM increases of 6.2 per cent and 5 per cent, respectively, to finish the calendar year at $9.8 billion and $31.5 billion.
Chief executive and managing director Bernard Reilly described the performance of its three businesses – asset management, corporate trust and wealth management – as “mixed”.
“Corporate trust delivered solid growth in funds under administration (FUA) totalling 2.5 per cent, supported by growth across the majority of products and in wealth management, the business delivered growth of 1 per cent in funds under advice (FUA) driven by favourable market movements,” Reilly said.
Breaking down the performance of its corporate trust business, its debt market services division recorded FUA of $725.2 billion, up 1.3 per cent on the previous quarter.
Meanwhile, the managed funds services division’s FUA was $525.0 billion, an increase of 4.1 per cent, driven by growth across all products.
For its wealth management business, Perpetual said the 1 per cent FUA increase was underpinned by positive market movements of million, while net flows were flat.
Ahead of its half-year results, Perpetual estimates that it will recognise performance fees of around $15.9 million for the six months to 31 December 2024, compared to $5.4 million in 1H24.
“The devaluation of the Australian dollar results in higher revenue and expenses for the international business and performance fees result in higher variable remuneration expense (and higher revenues),” the company said.
Despite this, 1H25 expense growth is expected to continue to be in the previously announced guidance range of 2–4 per cent, with expectations that this will end up on the “upper end” of that range.
Moreover, significant items after tax for 1H25 are expected to be between $85 million to $92 million.
Update on KKR transaction
In an update to Perpetual’s $2 billion deal to sell its wealth management and corporate trust businesses to KKR, Perpetual said on Thursday that KKR and Perpetual are “continuing to engage constructively in relation to the transaction”.
“Perpetual will keep the market informed in line with its continuous disclosure obligations,” it said.
Notably, last month an independent expert warned that soaring tax liabilities make the proposal untenable and not in shareholders’ best interests.
At the time, the fund manager said: “Further to Perpetual’s announcement on 10 December 2024, the independent expert has informed Perpetual that the risk and magnitude of the increased potential tax liabilities, if the transaction were to be implemented, mean that it would not be able to form an opinion that the scheme is in the best interests of shareholders.”
Namely, the Australian Taxation Office (ATO) provided its “written views” regarding the tax treatment of the transaction after what Perpetual described as “ongoing and extensive engagement”.
The revised tax liability ranges between $493 million and $529 million, a sharp increase from the previously disclosed $106 million to $227 million, the asset manager said in an ASX listing at the time.
As a result, the estimated cash proceeds to shareholders have been adjusted downward. The previously communicated range of $8.38 to $9.82 per share has been revised to $5.74 to $6.42 per share.
To contest the ATO’s position, Perpetual said it would need to withhold funds sufficient to cover the potential tax liability. The company warned that such a process would be lengthy, starting only after an ATO assessment, with no guarantee of a favourable outcome.
