The Perpetual Limited (ASX: PPT) share price is gaining solid ground since Monday, having come off a low of $37.07 to start trading this week.
At the time of writing, shares in the financial services giant are currently swapping hands up around 8% at $40.36 apiece.
Perpetual shares are on the move as the company released its quarterly business update for the quarter ended 30 September 2021.
Perpetual share price hikes as assets under management swell
Key investment highlights from Perpetual’s quarterly results include:
- Perpetual’s total Assets under Management (AUM) was A$101.0 billion1 as at 30 September 2021, up 2.7% on the prior period, with positive net flows of $0.1 billion.
- Perpetual Asset Management International’s (PAMI) AUM was A$75.5 billion, up 2.6%
- Perpetual Asset Management Australia’s (PAMA) AUM was A$25.5 billion, up 3%
- Perpetual Corporate Trust’s (PCT) Funds under Administration (FUA) of A$964.4 billion, up 5%
- Perpetual Private Funds under Advice (FUA) of A$18.5 billion, up 9%
What happened this quarter for Perpetual?
Perpetual continues to grow its AUM on a sequential basis, with another roughly 3% gain on the prior quarter to $101 billion.
This trend was carried through each of the company’s business segments, with each section of its portfolio experiencing a net gain.
The company also appeared pleased with the performance of its recent acquisition Triullium, with its AUM now standing at $8.3 billion, a substantial 48% growth in asset value since the transaction was completed.
Aside from this, Perpetual’s other recent acquisition, Barrow Hanley, is due to announce its plan to launch its first collateralised loan obligation (CLO) fund later this year.
The tuck-in of Barrow Hanley has resulted in a “material improvement in the overall (fund) flow profile, particularly in (its) equities strategies, which saw net inflows of $500 million”.
Alongside these cost synergies from its recent acquisitions, the company’s core business segments continued to display strengths this quarter.
PAMI grew its AUM by around 3% from the previous quarter, with the bolus of this growth underscored by positive foreign exchange impacts of $2.9 billion and inflows of $1.5 billion into its ‘Global Equities strategies’.
Meanwhile, the Australian arm of its asset management segment also expanded its AUM by 3% across the quarter, underlined by “positive investment markets and positive relative investment performance”.
Perpetual also received two awards in this segment, in addition to receiving the Zenith Fund Manager of the Year Award for 2021.
The company’s “Diversified Real Return Fund” won the Multi Asset Real Return award for the third year in a row, whereas its Perpetual Share Plus Long Short Fund crowned the Australian Equities Alternative Strategies category.
Investors appear impressed by the wealth of progress the fund manager has made this quarter, and are pushing up the Perpetual share price on a volume 37% higher than its 4-week average trading volume.
What did management say?
Presumably satisfied with the company’s results this year, Perpetual CEO and Managing Director, Rob Adams said:
Our asset management teams have delivered strong performance during the quarter, with another period of outperformance across the majority of our investment capabilities. It was pleasing to see that the combination of our Australian and International asset management businesses experienced positive net flows for the quarter.
Regarding the accolades Perpetual earned this year, Adams added:
As a reflection of the strong performance for our clients during the 2021 financial year, Perpetual Asset Management Australia (PAMA) was recently awarded the Zenith Fund Manager of the Year award for 2021. We are extremely proud of this award, which recognises the strong relative investment performance across PAMA’s capabilities.
What’s next for Perpetual?
The company gave some colour on its updated expense guidance, following an International Financial Reporting Standards Interpretations Committee (IFRIC) assessment of how the company was capitalising on the expenditure around its cloud computing arrangements.
This was previously announced in the company’s FY21 results, however, the company advised today the assessment is now complete.
As a result, “significant items relating to integration costs will increase slightly”, which means the company had to update items on its expenditure modelling.
Perpetual also completed the acquisition of Laminar Capital on 5 October. Combined, these new expenditures result in an updated change to significant items to $42–$47 million, per the release.
Consequently, as per Perpetual, guidance will move from 2–4% to 3–5%, with Laminar’s earnings showing accretion to the company’s bottom line from FY22.
Perpetual shares have climbed 16% this year to date, having posted a return of 35% in the past 12 months.