Perpetual Limited (ASX:PPT) may provide further insight into its strategic review this week, with KKR & Co. Inc. (NYSE:KKR) now understood to be in exclusive talks for a $1 billion-plus acquisition of its corporate trust and wealth management units. DataRoom revealed online on April 19, 2024, that Perpetual had won the exclusive right to negotiate with the Australian listed financial group, after earlier reporting it was firming as the favourite in the competition to buy the assets.

But observers are also keen to know KKR's plans for the businesses. The theory circulating last week was that the business would be integrated into its Colonial First State wealth management operation that it jointly owns with CBA, after buying 55% in 2020 for $1.7 billion. However, KKR sources dismiss this.

The New York-based buyout fund has also fended off suggestions it will sell the CFS business in the next two years, despite some saying growth rests on mergers and acquisitions. It's not the first time KKR has bid for Perpetual - it lobbed an all company offer back in 2010 for $1.75 billion but it never got off the ground. Last time, Perpetual's wealth management clients had plenty to say about the mooted acquisition, and this time that's is seen as something KKR will have to manage.

Observers believe the upside for KKR will be growing the corporate trust unit, with few synergies between its operations and Perpetual wealth management. One idea is that KKR could replace Perpetual's white label wrap product with the CFS Edge wrap platform, and there could be an opportunity to reduce costs by bringing in its own staff. KKR, advised by Jefferies Australia, has come out as the frontrunner after ousting Barrenjoey-advised EQT, which is partnering with the Morgan Stanley-advised TA Associates, which wanted the wealth management unit, and Permira.

Perpetual, led by Rob Adams and carrying $734 million of debt, has been running a sale process to determine whether to part with the corporate trust and wealth management divisions. Final bids landed before Easter. Luminis Partners is working for Perpetual's board.

The strategic review coincided with a scrip buyout proposal late last year from Soul Patts that would value the group at $3 billion or $27 a share.