KKR's Perpetual Bid May Spark Australian Funds Mergers


Kohlberg Kravis Roberts & Co. offered to buy Australian asset manager Perpetual Ltd. for as much as A$1.75 billion ($1.73 billion) to tap expanding wealth in the world’s fourth-biggest pool of managed funds.

New York-based private-equity firm KKR’s bid is priced between A$38 and A$40 per share, Perpetual said in a statement to the Australian stock exchange, 29 percent more than its close on Oct. 15. The shares jumped 22 percent in Sydney today.

Departing Managing Director David Deverall has overseen a recovery in Perpetual’s earnings in an economy that skirted last year’s global recession. The purchase of Perpetual, whose shares had slumped almost two-thirds from a peak in 2007, would be the biggest acquisition of an Australian fund manager in a decade.

“It could be regarded as opportunistic,” said Paul Xiradis, who manages about $12 billion as chief executive officer of Ausbil Dexia Ltd. in Sydney. “One of the things that private equity look at is the cash that it generates and throws out, and they have had a period of under-performance” on the stock market.

Perpetual’s shares tumbled 63 percent through Oct. 15 from a record in May 2007, and 17 percent this year. The stock, which ended Oct. 15 at A$30.97, climbed A$6.83 to A$37.80 today.

Shares of Platinum Asset Management Ltd. and Challenger Financial Services Group Ltd. both rose 3.9 percent. The benchmark S&P/ASX 200 Index dropped 0.8 percent.