Perpetual - Sold by Christmas

Perpetual says it is in the final stages of selling its financial planning business and expects the deal to be done before Christmas.

Wednesday, November 28th 2012, 12:24PM

PGC said, in an announcement to the NZX, that it expects an announcement of a conditional sale before Christmas.

"The wealth management business has attracted multiple proposals and PGC is in final negotiations with the preferred syndicates," it says.

PGC managing director George Kerr is offshore this week closing details of this process and will not be able to attend the AGM. “Unfortunately I am unable to attend as we are working to a tight timeline to achieve a quality exit of Perpetual by calendar year's end. This is a major priority to preserve value for shareholders."

The completion of the Perpetual sale will see PGC with no further direct operating businesses in New Zealand.

The PGC balance sheet will be made up of the Torchlight Investment Group (TIG)and Torchlight Securities.

TIG has a 19.7% stake in the Torchlight Fund 1 LP, or $30m of capital at risk. The fund is well positioned and tracking to deliver in excess of 20% over the life of the fund, PGC says.

"This is made up of realised and unrealised gains to date. The gains may not be realisable until the underlying asset strategy is executed prior to the end of fund life in late 2019."

TIG also is invested in the Torchlight Fund 2 LP. Cash from the distressed real estate from the bad book of Marac is used to seed this fund. The fund’s mandate is financial services and real estate.

Since 2010 it has held a $2 million commitment to litigation funding. The fund has made a pragmatic decision to exit New Zealand exposure to indirect litigation funding - which it has now executed at book value.

Torchlight Securities holds 27%, or 42 million shares, of EPIC - worth $19 million at the last issue price of 45 cents. EPIC owns 17% of Moto and around $10 million of cash and securities.

"We have consistently argued the merits of Moto. For long term investors, it has powerful cash-flows - amounting to around £75 million a year - allowing for steady debt amortisation and capital growth for shareholders."

The latest EPIC annual report shows a significant increase in NTA and we continue to expect strong long term returns.

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