What is Pendal?
Pendal is the new BT Investment Management. Having moved away from Westpac, Pendal is now one of Australia’s largest fund managers, with more than $100 billion invested across its business.
What is happening?
Westpac has sold down Pendal shares in 2007, 2015 and 2017. It’s now going to sell its remaining Pendal shares.
The major bank has announced a fully-underwritten offer of the approximately 31 million shares, which is around 9.5% of Pendal, to institutional investors.
The offer price for the shares has been set at $5.98 per share, which is a discount of 4% to Pendal’s last closing price of $6.23 on 17 June 2020 and a 5.1% discount to the 30-day average share price of $6.30.
Westpac acting chief financial officer (CFO) Gary Thursby said: “Pendal is a highly regarded, independent business, and given Westpac’s commitment to simplify its operations and focus on banking in Australia and New Zealand, now is the right time to complete our divestment.”
Westpac said that it withdrew $2 billion of funds under management (FUM) in February 2020. Another $1 billion is expected later in the 2020 calendar year and then $0.08 billion is expected to be withdrawn later in the 2021 calendar year.
The major bank is now doing a strategic review of its BT wealth businesses including superannuation, platforms and investments, this will occur as part of the newly formed specialist businesses division. After this review, there may be a loss of some or all of the funds that Pendal manages for Westpac. Excluding the expected FUM withdrawals mentioned above and FUM originating from BT platforms, Pendal manages $14 billion for Westpac.
Time to sell Pendal?
The loss of FUM isn’t great for Pendal, so I can understand why investors may feel pessimistic about the situation. There’s also the ongoing shift towards cheap, passive investing. It’s good that Westpac is going to strengthen its balance sheet though.
Disclosure: At the time of writing, Jaz doesn’t own shares in any of the businesses mentioned.