Geoff Lloyd, the managing director of Perpetual Trustees, announced last Monday he would leave the firm next year. That was a shock. Then, on Friday, Amanda Gillespie, the chief executive of research firm Lonsec, announced she would join Perpetual in a new role. What’s going on?
Lloyd will have racked up about eight years at Perpetual by the time he leaves in the first half of next year. He believes that companies need refreshing at regular intervals, as do their senior executives. At age 49, he believes he is too young to start down the non-executive director route and he would like at least one or perhaps two more senior executive roles in the industry before he moves into semi-retirement. If he has something lined up, though, he is keeping his own counsel about it.
There is no doubt that Lloyd has been very successful as Perpetual’s managing director, which he took on in 2012 after joining the company two years earlier as head of the private wealth division. But his pending departure raises questions about where Perpetual is likely to go.
Lloyd said in a brief interview last week that, given the success of Perpetual’s Australian equities strategies, the firm had needed to diversify into both other asset classes and other business offerings over the past few years. Capacity had become an issue.
He said: “When I started, Perpetual Investments was about 90 per cent of the profits… Perpetual Private has grown significantly as has the Corporate Trust business. I’ve sold five businesses and I bought the Corporate Trust Company. We have had some significant changes.”
The investments arm now generates about 60 per cent of profits before tax, while Perpetual Private – the high net worth advisory business – about 21 per cent and the expanded corporate trust division about 19 per cent. Investments continue to have the best margins, though. Whether or not that is sustainable in an industry going through fee disruption, is open to conjecture.
Asked about the possibilities if Perpetual splits its investment arm from the rest of the company, Lloyd said that valuations for each arm had changed in recent years. The multiples for investment companies had come down, due to fee compression, while the relative value of Perpetual’s private advisory and trust business had risen. They were now all about equal, Lloyd said.
It is believed that an investment bank last year put a proposition to Perpetual to split the company up. Lloyd said Perpetual had not commissioned any such work and he did not confirm that it was done. Nonetheless, the work indicated that the whole was worth more than the sum of the parts. The share market has bid up diversified financial services companies such as Perpetual – and there are others such IOOF and perhaps even AMP – beyond the valuations of their constituent parts.
So, where does Perpetual go from here? Lloyd said: “We talk about ‘one Perpetual’. It’s a brand which has stood for decades… My strategy has been for a three-legged stool [investments, advice and trusts]. The diversification [away from investments, and in particular Australian equities] has been deliberate.”
Meanwhile, Lloyd, who left BT to join Perpetual, has hired another former BT alumni, Amanda Gillespie, in a surprising move announced last Friday. Gillespie is the highly regarded chief executive of research house Lonsec Fiscal, which includes SuperRatings, and will leave that firm with a big hole to fill. She has been at the firm for about six years.
Gillespie has been appointed to the new position of general manager of client solutions and strategy in the Perpetual investments division.
Greg Bright is publisher of Investor Strategy News (Australia)