Perpetual Ltd has confirmed media reports that it is negotiating to sell its corporate trust business, putting the biggest trustee in the Australian loan securitisation market on the block.

Perpetual announced yesterday that it has entered into exclusive talks with global private equity firm Kohlberg Kravis Roberts & Co in relation to the potential acquisition of its corporate trust and wealth management divisions.

Exclusivity will expire on May 7. Perpetual will provide a market update on May 8.

Perpetual’s asset management business has grown through acquisition in recent years, with Pendal Group the most recent buy, and the company now has A$213 billion of assets under management. 

The corporate trust and wealth management businesses are no longer seen as core and shareholders are concerned that the returns from these businesses are not reflected in share market valuations.

The corporate trust division has $716 billion of funds under administration in its debt market services business and $428 billion of FUA in its managed funds services businesses. The wealth management division has $19.1 billion of funds under advice.

Last December, the board announced a strategic review “to explore the benefits of unlocking additional value for Perpetual shareholders” through the separation of the two businesses.

The corporate trust business has a history or low margins and slow growth, with growth in expenses outpacing growth in revenue in recent periods.