Australian diversified investor Washington H Soul Pattinson (WHSP) (SOL.AX) has made a A$3.1 billion ($2 billion) bid for domestic fund manager Perpetual (PPT.AX) in the latest sign of consolidation in the country's wealth management sector.
WHSP is Perpetual's largest shareholder with a 9.9% stake and the bid came hours after Perpetual announced that it was looking at splitting off its corporate trust and wealth management businesses from its core asset management division.
Perpetual, which saw its shares surge 6% on news of the strategic review, did not respond to a Reuters request for comment on WHSP's bid which was announced after market hours.
The indicative non-binding scrip bid values Perpetual at A$27 a share which is a 28.6% premium to its share price on Nov. 13 when WHSP revealed an increased stake in the company.
The bid calls for Perpetual's asset management business to be spun off and distributed back to Perpetual's existing shareholders, WHSP said in a statement.
WHSP would retain ownership of Perpetual's wealth management and corporate trust businesses and take on about $A700 million worth of Perpetual debt.
The $A3.1 billion offer would consist of A$1.06 billion worth of WHSP scrip and A$2 billion worth of Perpetual Asset Management scrip.
"WHSP believes the complexity of the Perpetual group together with the current market backdrop and Perpetual's high financial leverage is weighing on the share price and constraining Perpetual's strategic flexibility," the firm said.
Morningstar equity analyst Shaun Ler said the WHSP bid represents fair value for Perpetual at a time when the macroeconomic climate does not favour fund managers.
The deal also allows investors to cash out without needing to take on the execution risk of Perpetual's own plan to split off assets, he added.
