US Private equity firm Kohlberg Kravis Roberts (KKR) has offered up to $1.73bn (£1bn) for Australian fund manager Perpetual, reigniting merger interest in Australia’s $1 trillion wealth management sector.
Australia’s wealth management industry is the world’s fourth largest and is expected to grow at 12 per cent a year, but mergers have dried up over the past year, with the sole exception of National Australia Bank’s (NAB) failed $12bn bid for wealth manager AXA Asia Pacific.
KKR’s indicative bid of between A$38 and A$40 a share, a premium of up to 29 per cent on Perpetual’s closing price on Friday, took investors by surprise, triggering a rally in shares of Perpetual and rivals.
Perpetual shares surged to A$39.39, a nine-month high, before easing back to A$37.78, up 22 per cent. Fund manager Platinum jumped 5.4 per cent, Challenger Financial rose 4.3 per cent, AMP climbed 2.4 per cent and AXA Asia Pacific added two per cent.
“The bid certainly shows the financial sector, especially funds management, will see consolidation in the coming year,” said Simon Burge, executive director at ATI Asset Management.