By Eric Johnston
Update US private equity giant Kohlberg Kravis Roberts has made a bid for Perpetual Ltd, sending shares of the local funds managers jumping by more than a quarter in value.
Perpetual said its board hadn't formed a view on the bid and recommended shareholders take no action, according to a statement to the ASX.
The bid for all of Perpetual's shares is via a scheme of arrangement at a price of $38-$40 a share. Perpetual's shares soared as much as $8.42, or 27 per cent, to $39.39 at the resumption of trading, before easing to close at $37.80 - a gain of $6.83, or 22 per cent for the day, to $37.80.
Shares in rival Challenger Financial Services Group also surged, gaining 25 cents, or 5.4 per cent, to $4.87 in early afternoon trading. The company today unveiled record quarterly sales for its life annuities business.
The 125-year-old Perpetual said the offer was ''indicative, incomplete, conditional, and non-binding'' and by way of a scheme of arrangement.
Private equity firm KKR made a name for itself in Australia for its ambitious, but unsuccessful move on retailer Coles Group.
Perpetual said its board had formed a sub-committee to consider the indicative proposal. The committee is led by Peter Scott, Perpetual's Chairman-elect.
Of the nine analysts that track Perpetual, the average one year share-price target is $33.20 a share, according to Bloomberg data.
Perpetual motion
The offer comes amid significant top level change at Perpetual.
The fund manager which has $27 billion under management, is on the search for a new chief executive after David Deverall recently flagged his retirement after seven years in the role.
The 125-year-old Perpetual has found itself under pressure in recent years, mostly as a result of shaky global markets. These have hit profits and derailed strategies to expand into global equities and unlisted funds such as infrastructure.
The lack of an investment platform and an underweight distribution network have allowed the banks to crowd it out of the market.
But Perpetual has recently bulked up on providing financial advice to the wealthy while its investment products under top stock-picker John Sevior remain well regarded.
In August, Perpetual unveiled an annual profit $90.5 million, compared with $37.7 million the previous year. Improving equity markets were behind the profit rebound, although the fund manager has cautioned that investor sentiment remains fragile.
The earnings rebound was driven by Perpetual's funds business while wealth management also supported gains. Earnings from corporate trust services remained under pressure.
Perpetual said it had retained Goldman Sachs as financial adviser and Freehills as legal adviser on the potential deal.
''The Perpetual Board has not formed a view with respect to the indicative proposal and recommends that shareholders take no action at this time in relation to their Perpetual shares.''
The company said it would make a further announcement at the earliest possible date.
ejohnston@theage.com.au
BusinessDay, with AAP