VENNNN.docx - Introduction and Company Overview Perpetual...

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Introduction and Company OverviewPerpetual Investments Limited (PIC) has over 50 years of experience in active equities management.It has been one of the Australia’s leading investment managers that helps growing investor’s wealthover the past years. The company was listed on the ASX being a listed investment company on 18December 2014. It focuses on predominantly investing in quality listed Australian securities in itsportfolio with opportunistic allocations to global listed securities as appropriate. It usually invests up to85% in securities and are flexible to invest up to 25% in cash. Its market capitalisation wasapproximately $2.0 billion and had $32.8 billion funds under management as at 30 June 2018(Prospectus, 2018). For the last financial year, ended 30 June 2019, the company had 34 Australianand global securities in its portfolio (refer Appendix 1). Total market value of the securities amountedto $385m as at 30 June 2019 and company has entered into 1,185 transactions relating to its 34securities (Annual Report, 2019). PIC has three main businesses namely: Perpetual Investments,Perpetual Private and Perpetual Corporate Trust with funds under administration with funds undermanagement of $32.8 billion, $13.7 billion and $662 billion as at December 2017 (Prospectus, 2018).Perpetual Investment Management Limited (AFSL 234426) is the Fund Manager who implements thecompany’s investment strategy. This is a wholly-owned subsidiary of Perpetual Limited and itsservices are offered through the Perpetual Group’s investment funds management business.In this report, we wish to perform comprehensive due diligence and analysis on the company in orderto advise our potential high-net-worth individual whether to proceed with the investment.Investment Philosophy and StrategyPIC’s investment philosophy is to buy high quality companies at prices below their fair value asassessed by the company. Investment professional of the company undertakes extensive research toanalyse market conditions, fundamentals of the investments in order to determine fair values andquality of its investments. Their strategy is about creating a concentrated and actively managedportfolio consisting Australian securities with a mid-cap focus and global listed securities (AnnualReport, 2019).PIC uses four quality filters in deciding on its investment companies;1.Sound management: history and track record of management to maximise shareholdervalue and sound governance practices.2.Conservative debt: perform thorough scrutiny on the balance sheets in order to avoidoverleveraged companies from its portfolio.3.Quality of business:overview of the industry with reference to market share, productpositioning, barriers to entry and other social and environmental impacts.2
4.Recurring earnings: PIC prefers companies that has at least 3 years of track record thatshows cash flow and earnings.

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