Wealth Management sale key for Perpetual debt

Mike Taylor

Managing Editor/Publisher, Financial Newswire

2 March 2026

Research and ratings house Morningstar has given Perpetual Limited a generally positive assessment in the wake of the company’s half-year results but has warned that the company needs to complete the sale of its Wealth Management business to meaningfully lower debt.

With Perpetual still yet to close the deal with Bain Capital on the sale of the Wealth Management division, Morningstar senior analyst, Shaun Ler said a successful sale of the business, roughly valued at $450 million, is needed to meaningfully lower debt.

“In the absence of a sale, we expect growth investment and dividend payments to constrain debt repayments, leading to a gearing ratio (debt/debt plus equity) remaining around 30%,” his analysis said.

“This is still below covenants, which Perpetual did not specify but implied are significantly higher than 30,” Ler said.

Morningstar retained its fair value estimate for Perpetual at $20.30 noting that shares are currently screening as modestly undervalued at current prices.

Having also noted that fiscal 2026 earnings are tracking in line with expectations and that cost-outs remain the primary earnings driver, Ler’s analysis said Morningstar believes the market underappreciates the value embedded in Perpetual’s future cash flows across its remaining businesses.

“While concerns about asset management outflows and fee compression are valid, we believe these risks are already reflected in our forecasts, with redemptions averaging 85 of funds under management per year, well above the 0% base rate we typically assume for active equity managers,” the analysis said.

“We also believe investors underestimate the earnings support from corporate trust, where volume growth, resilient fees, and active cross-selling of ancillary products are likely to underpin a steady earnings stream and meaningfully limit group-level earnings compression.”