Westpac announces offer of 31m Pendal Group shares to institutional investors

Maria Nikolova

The offer price has been set at $5.98 per share, which is a discount of 4% to Pendal’s last closing price on June 17, 2020.

Westpac Banking Corporation today announced a fully-underwritten offer of approximately 31 million Pendal Group Limited (ASX:PDL) shares to institutional investors.

Today’s announcement is in line with Westpac’s disclosures since the time of its previous sell-down of Pendal shares in 2017 in which Westpac has indicated that it would sell its remaining stake in Pendal at some future date.

The offer price for the shares has been set at $5.98 per share, which is a discount of 4% to Pendal’s last closing price of $6.23 on June 17, 2020. The offer price represents a 5.1% discount to the 30-day VWAP of $6.30.

Finalisation of the offer will finalize the divestment of Westpac’s proprietary shareholding in Pendal, following earlier share sales in 2007, 2015, and 2017. Settlement of the transaction is expected to occur on June 22, 2020.

Completion of the offer is expected to add approximately 2 basis points to Westpac’s Common Equity Tier 1 capital ratio and will result in a post-tax accounting gain for the second half of 2020 of $32 million that will be included in Westpac’s Full Year 2020 statutory result.

Following the sell-down of its shares in Pendal in 2007, 2015 and 2017, Westpac has had an ongoing business relationship with Pendal, including Pendal managing some assets within Westpac’s superannuation business. Approximately $1.5 billion in funds under management (FUM) was withdrawn from Pendal in April 2019 and approximately $1.0 billion was withdrawn in February 2020. A further withdrawal is expected to occur in two tranches, with the first tranche of approximately $1.0 billion to occur later in 2020 and an anticipated further tranche of up to $0.08 billion to occur later in the calendar year 2021.

Westpac’s strategic review of its wealth businesses (including superannuation, platforms and investments) will occur as part of the newly formed Specialist Businesses division. Following this review, there may be a loss of some or all of the funds that Pendal manages on behalf of the Westpac Group. As these businesses are currently undergoing a strategic review, it is too early to determine if there will be any impact on the Westpac Group funds managed by Pendal, Westpac explains.

Excluding the expected FUM which is the subject of the FUM withdrawals referred to above and FUM originating from BT platforms, Pendal currently manages approximately $14 billion (as at 31 March 2020) for the Westpac Group.

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