Shares of investment manager Pendal Group jumped more than 8% in Tuesday’s selloff after it surprised on the upside with a solid interim result.
The shares ended at $5.33 but had been up as much as 10% – not a bad reaction in a market that saw the ASX 200 dive 2.5% at the opening after another rough session on Wall Street on Monday.
Pendal reported a net profit of $96.7 million for its the half compared to $89.9 million for the same period in 2020-21.
Helping keep the shares up in the sell-off was news in the release that underlying profit after tax increased by 59% over the same time last year to $131.4 million.
Total revenue and other income rose 20% to $351.9 million as average funds under management climbed 37.3% during the period thanks to the takeover of a big US fund manager.
The full six-month contribution from US investment management firm Thompson, Siegel & Walmsley (TSW) – bought at the end of the 2021 financial year drove the improved result.
“We have seen TSW’s value strategies outperform in the past quarter and despite cautious US investor sentiment, TSW’s international strategies have seen inflows,” said according to Pendal CEO, Nick Good.
“The integration of TSW is tracking well… Execution of a coordinated sales strategy has begun, with cross-selling opportunities emerging.”
On the face of it a 20% jump in costs in the half year would have had investors screaming, but much of that reflected the costs of the new US operation. Excluding those, costs rose a sedate 4% which is far more pleasing to the market.
Pendal is the subject of a $2.4 billion takeover bid by Sydney based investment rival Perpetual, which values it at $6.23 a share.
Pendal will pay a partly franked interim dividend of 21 cents a share, up 24% and no doubt designed to keep shareholders from saying ‘yes’ to Perpetual, as is a $100 million buyback now underway – and useful in the current market volatility.
