Perpetual (PPT)
BUY

PPT - Stock Update

 6 Apr 2022
Sector: Financials

Event Spotlight: PDL/PPT Bid Update

Perpetual has made a takeover bid for local peer Pendal. The conditional non-binding offer represents an ~39.2% premium to last close. PPT confirms that it sees at least $50m in pre-tax synergies. It is still early in the process although a connection between Perpetual & Pendal is not necessarily unexpected and could be highly earnings accretive.

The Pendal / Perpetual situation is a reminder that there are still opportunities in the space for deals to be done. Another deal in the space that has speculation around it is AMP’s sale of their real asset business called “Collimate Capital”. The quality of the AMP asset provides a large breadth of possible suitors for the deal.

It is worth keeping an eye out for these opportunities. There are still potential risks surrounding the situation given it is still in very early stages. Notable risks include Pendal’s push for a higher price as well as the integration risks that comes from such acquisitions

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Company overview

PPT is a diversified financials company that includes multiple different segments such as Perpetual asset management international (PAMI), Perpetual Asset Management Australia (PAMA), Perpetual Private (PP) and Corporate Trust (CT).

Given the Pendal bid goes through, the synergies could potentially offer strong upside for PPT. Perpetual’s Corporate Trust business is a market-leader and is difficult to replicate. This, along with the performance in the other aspects of the business supports our investment thesis of a BUY rating.

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