The frictionless movement of assets is becoming a common feature of markets around the developed world, yet Australia remains a step behind. The ASX is in no mood to rush the move to T+1, however, after its calamitous attempt to implement distributed ledger technology.
It’s a dire situation for consumers but a massive tailwind for financial advisers. More people and more capital in the superannuation coffers than ever, with a stubbornly small number of advisers to service them.Â
Perpetual plots world domination
A slew of acquisitions has made homegrown investment manager Perpetual (ASX: PPT) a truly global business. CEO Rob Adams says there’s plenty more to come.
A 26 per cent increase in net profit, to $124.1 million, has book-ended what Adams described as a “transformational year,” in which multiple bolt-on acquisitions took Perpetual from a key player in its Australian stomping ground to a prospective competitor in global markets.
“Our business today is markedly different, with greater capability and growth potential, than the one I reported on just 12 months ago,” Adams says. “Our strategy to build a global asset management business, adding world-class and distribution capabilities, is well underway and is starting to deliver results. We have evolved from a primarily Australian-focused business with around $28 billion in AUM (assets under management) to become a more diverse asset management business now approaching $100 billion in AUM.”
The acquisition of US-based managers Barrow Hanley (currently in net outflow, though Adams says the business is performing “in-line” with its expectations) and Trillium means that about 75 per cent of Perpetual’s $98.3 billion AUM is now managed offshore, and Perpetual has a distribution presence in, or coverage of, all major developed markets.
Adams anticipates more acquisitions going forward, both in the asset management division and through Perpetual Private (PP), which recently guzzled HNW wealth manager Jacaranda.
“There are a couple of small acquisitions we’re looking at in the asset management space right now, where there’s complementary investment management capabilities, and that includes here in Australia too… We are light-on in terms of alternatives, we are light-on in private market assets, and those are areas of interest to us,” Adams says.
“In PP, the Jacaranda deal is exactly the sort of transaction that is right up our alley, where we have cultural alignment with a high-quality team running a terrific business. We can learn from each other and hopefully provide improved leverage for that business, and that’s exactly the sort of thing we’ll continue to look for.”
Barrow Hanley and Trillium – which “by its own admission” was under-invested in marketing and distribution prior to its acquisition by Perpetual – will likely see further expansion through team lift-out and their own bolt-on acquisitions, as Perpetual attempts to turn them into “truly global asset management firms”. That’s at least partly in service of Perpetual’s ambition to exploit what Adams believes is the dominant and now-permanent investment megatrend: ESG.
“To have Trillium now as a key part of Perpetual is significant, both for the growth that we have already begun to evidence and that we can continue to generate for them, but also for the expertise that Trillium brings to help advance our own thinking on sustainability across Perpetual, through their deep specialist experience built since 1982,” Adams says.
“Barrow Hanley have been managing ESG assets for 35 years and they have a proprietary ESG score applied to every security they own – a core component of their process. In Perpetual Corporate Trust we act as a fiduciary for a range of ESG firms, and expect this sector to grow. In PP, our client allocations to ESG-related categories are amongst our fastest growing,” Adams adds.
