Pendal reported a revenue boost of 31 per cent in the first half of 2022 to $362.6 million, on the back of completing the acquisition of US fund manager Thompson, Siegel & Walmsley (TSW) in July.
Operating expenses increased by 20 per cent to $209.6 million which included the full contribution of TSW in the period.
“Pendal Group has delivered a solid first-half result in a tough environment for asset managers. We delivered healthy growth in revenue, underlying EPS, UPAT and the interim dividend,” said Pendal Group CEO, Nick Good.
“While continuing to invest in our business, we have taken a more disciplined approach during the period, in response to the current market environment and tempered investor confidence.”
The investment manager’s average funds under management (FUM) increased by 37 per cent to $133.3 billion, supported by the acquisition of TSW and higher global equity markets.
“Pendal acquired TSW in 2021, materially enhancing and diversifying our US product range. We have seen TSW’s value strategies outperform in the past quarter, and despite cautious US investor sentiment, TSW’s international strategies have seen inflows,” said Mr Good.
“The integration of TSW is tracking well. The teams are working well together under single US leadership, while maintaining investment independence, which is core across Pendal Group. Execution of a coordinated sales strategy has begun, with cross-selling opportunities emerging, reflecting the complementary nature of our expanded set of investment capabilities,” he said.
Earlier this year, having recognised that Pendal’s share price was undervalued by the market, the board announced a $100 million on-market buyback, which it plans to fund with a combination of surplus cash and other financial assets.
Pendal confirmed it remains committed to a dividend policy that will see shareholders receive 21 cps this May, up 24 per cent.
Looking to the future, Mr Good said Pendal remains “focused on implementing our multi-year growth strategy”.
“While I am pleased with the progress made over the past six months, there is still more to do. Our priorities are to fully leverage our global distribution footprint, deliver long-term investment performance across a diversified, forward looking product set and to provide a platform that enables our teams to deliver exceptional client outcomes.”
Last month, Pendal turned down Perpetual’s offer to acquire 100 per cent of the shares in Pendal for an indicative $6.23 per share, just minutes before announcing its buyback.
In an ASX listing at the time, Pendal said that the board came to the decision to reject the bid having considered a number of factors including Pendal’s “compelling global distribution footprint” across the UK, Europe, the US and Australia, the value of which “is not adequately recognised in the indicative proposal”.
Moreover, Pendal asserted that the indicative proposal represents only a 0.3 per cent premium to the 180-day VWAP of Pendal shares up to 1 April 2022 and is materially below Pendal’s underlying standalone value.
