Legal pitfalls seen in Perpetual sale

One market player says it would be a surprise if anyone bought Perpetual’s trustee business because of potential legal liabilities.

Pyne Gould Corporation said on Monday it had several parties interested in buying all or part of its Perpetual Group business.

Pyne Gould has been under pressure from the Financial Markets Authority (FMA) after Perpetual lent $28 million from its Perpetual Cash Management Fund to related business Torchlight Fund No1 LP.

The money has since been paid back, but legal action is pending on Friday from the cash fund’s statutory supervisor, Trustees Executors.

Market commentator Arthur Lim said he could see potential interest in the wealth management part of Perpetual but not its trustee division.

“I would be very surprised if anyone would buy the trustee side of the business,” he said.

Lim said the trustee business faced brand issues in the wake of the FMA action and there could be future legal liability attached to it.

Bidders for the Perpetual business are believed to include the management of Perpetual headed by chief executive Patrick Middleton.

Yesterday there was also speculation that AMP-owned Spicers Wealth Management could be a potential buyer for the wealth management part of Perpetual.

But an AMP spokesman has said there was no truth in the rumour.

Lim said it was difficult to know how much Perpetual would be worth.

Meanwhile, Perpetual has applied for a licence from the FMA to continue operating as trustee for two KiwiSaver schemes.

Perpetual is trustee for Auckland-based NZ Funds KiwiSaver scheme and Iwi Investor, a KiwiSaver scheme run out of Taupo.

Trustees are presently going through a new licensing regime. All trustees were issued temporary licences under a provisional system and the FMA has until the end of September to grant full licences.

By Tamsyn Parker
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Tuesday, July 31st, 2012 EN

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