KKR May Sweeten Bid for Australian Fund Manager

Buyout shop Kohlberg Kravis Roberts & Co. may increase its $1.7 billion bid for Australian fund manager Perpetual, Reuters reported, adding that the firm had recently received new financial data on the company. Any increase would be small, and “well below 10%,” Reuters said.

(Reuters) – Private equity firm Kohlberg Kravis Roberts & Co may raise its $1.7 billion offer for Australian fund manager Perpetual after receiving fresh financial data, but any increase in the bid would be small, sources said on Friday.

A preliminary study of the information showed Perpetual was forecasting a better-than-expected outlook and KKR may nudge up its original offer to gain full due-diligence, although no final decision has been made, three sources familiar with the deal told Reuters.

KKR was seeking more talks with the Perpetual management to understand the basis for the improved numbers before deciding whether or not to sweeten its bid, said the sources, who declined to be named as the discussions are private.

However, any increase in the offer would be minute, — well below 10 percent according to one of the sources — and would be primarily aimed at reining in any disgruntled Perpetual shareholder as KKR considers the offer is fully valued.

“A lot of options are being debated after seeing the strong numbers. A revised bid is a possibility but not a certainty,” one source said.

KKR offered A$38 to A$40 for each Perpetual share in October, which Perpetual dubbed as too low but still offered to give limited information and continue talks.

Perpetual is one of Australia’s top independent fund managers in the world’s fourth largest — $1 trillion — wealth management sector and offers the few remaining acquisition opportunities after AMP agreed on a deal with AXA Asia Pacific .

KKR will look to club Perpetual with its global asset management portfolio, which includes Legg Mason that has $685 billion assets under management, to extract value.

Perpetual, founded in 1885, has a huge retail shareholder base of up to 70 percent and any takeover offer will need a board resolution. Analysts have said any firm bid will need to be at the top end of the range. (Reporting by Michael Smith & Narayanan Somasundaram; editing by Balazs Koranyi)