Some of Perpetual Limited’s (ASX: PPT) investment funds increased their equity holdings in dual-listed Henderson Group plc (ASX: HGG) (LON: HGG) last week, as both fund managers continue to enjoy exuberant global equity markets. Both businesses have doubled in market value over the last two years, with UK-based and globally-focused Henderson having also bought two small Australian equity managers (H3 Global Advisors and 90 West) in 2013.
Henderson is also on the record as stating it expects to continue its investments for growth in international markets over the next five years. With a primary listing on the London Stock Exchange, Henderson is a big European fish with potential to flex its muscles further in the small Australian equities pond. It now has the equivalent of around $140 billion of assets under management, compared to Perpetual around $31 billion.
Perpetual has struggled to substantially grow funds under management via net inflows in recent times, despite some strong performance from its managed portfolios. The group says its reinvigorated sales and distribution strategy is starting to deliver better results, although this has not translated into significant FUM growth via net inflows. In fund management talk, sales usually means the key deliverable of institutional business development, while distribution is about attracting retail investors by winning more places on financial advisers’ products lists or discretionary investment platforms.
Notably, Perpetual also has a heavy leverage to the management of Australian equities and proportionately small presence in the management of global equities. Henderson has an emphasis on global equities, vocal desire to grow in Australia, and strong reputation for successful sales and distribution strategies. The two would seem a nice fit in theory, however Perpetual’s recent acquisition of The Trust Company suggests it’s still committed to a future providing fee-earning trustee and advisory services outside the asset management space.
Henderson originally demerged from AMP Limited (ASX: AMP) in 2003, and any theoretical merger with Perpetual would catapult the new entity into an A-League of heavy-hitting Australian asset managers. In terms of funds under management a combined entity could easily compete with the Commonwealth Bank of Australia’s (ASX: CBA) Colonial First State asset management business, or Westpac Banking Corp’s (ASX: WBC) majority owned asset management business BT Investment Management Ltd (ASX: BTT).
How much Henderson likes the look of Perpetual is unknown, but it seems Perpetual is positive on Henderson’s future given the share buying last week.
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