Board Challenger, page-13

I listened to the Livewire piece....Forrest highlighted PPT's great brand and historical reputation, then problems with the deal , told us why he's a great board candidate (despite never being on a board) and articulated a motherhood and apple pie approach for improving shareholder value by focusing on process, people and governance. He also said 80% of the transaction value is in Australian Equities, which generates $100M a year, and implied it is being sold. This confuses me as, while I understand the brand is being sold, the Australian Equities asset management team isn't being sold (is it?). Is he equating PPT's brand as the whole driver of the asset management business?

What I understood is we are selling for $2.2B (less costs and total debt):
1. Wealth Management arm, which as of Jun-23 had Funds Under Advice (FUA) of $18,5b and generated $217M revenue / $47M of underlying profit.
2. Corporate Trust arm, which as of Jun-23 had FUA 1.16T and $178M revenue/$82M underlying profit
3. The PPT brand (which does have value), after 7 years.

What shareholders retain is a global asset manager (including the Australian equities business) with FUM of $225B+ generating as of Jun-23 $600M revenue / $132M underlying profit (with 5 months contribution of pedal in that result) and no debt. Can they retain the FUM and profitability without the PPT name - that's the question. I think it will come down to fund performance rather than PPT name.

So subject to getting the tax, transaction fees and stranded cost info making sense, I think the KKR deal goes ahead and we lose the PPT name. The largest recognised industry brand value that would be left in the entity is Pendal - unless they undertake another expensive new name and branding initiative.

If KKR doesn't go through then best bet is to go with SOL's $27 offer as market has lost faith in the current structure / leadership team to capture the potential value out there.

I'm happy to be corrected if I'm confused by the deal construct or mistaken in my analysis above. Eitehrway, think PPT is currently 30-50% undervalued.