'We don't trust you'
Perpetual's management team were interrogated by analysts today over their $2.2 billion deal with private equity firm KKR.
You are more likely to hear an analyst praise a management team (great quarter guys!) than castigate it on an investor call these days. That’s why Perpetual’s call with investors today to announce a $2.2 billion deal to sell its corporate trust and wealth businesses to private equity firm KKR was so striking.
“I'm not sure if this is a joke, but are you guys here to tell us today to trust you with this deal and not provide a bunch of key information?" MST Marquee emerging companies analyst Lafitani Sotiriou asked. “Frankly, sorry, the market did trust you with the Pendal deal and we saw how that worked out. And, in case you are wondering, we don’t trust you”.
Investors could be forgiven for being exasperated. Perpetual’s aforementioned purchase of former rival Pendal (which was once known as BT) and its broader funds management expansion in recent years have proven to be disastrous for shareholders. And while the company did announce an eye-catching headline price for the sale of its other two core businesses, it was unable to confirm what the actual proceeds to shareholders would be because of uncertainty over tax arrangements, separation costs and other variables.
“I've been in the market for 42 years. I don't think I've ever seen a transaction like this,” said Tony Mitchell from Shaw and Partners. “I mean, if you weren't on the board, and you were people like us, wouldn't you be astounded that a company of your size can't provide this basic information?”
