The man who wants to turn his kingdom into $29b empire

Phil King’s Regal Partners has made a scrip-based bid for Platinum Asset Management, which would almost double its funds under management to $29 billion.

King’s Regal Partners, which has offered 0.274 of its shares for every Platinum share, has been patiently stalking the latter for two years. It was in 2022, when King first flagged Regal’s interest in Platinum, declaring the funds management group was ripe for takeover because of its poor performance. Back then, he said: “It’s been a big dog for a long period of time.”

In 2022, Phil King, co-founder of Regal Partners, was critical of Platinum’s performance: “It’s been a big dog for a long period of time,” he said.Credit: Dion Georgopoulos

Since then, Regal Partners, which was co-founded by King, has led consolidation in the funds management and alternative investment sectors, doing a handful of deals that have included acquiring Paul Moore’s PM Capital, private credit group Merricks Capital, and stakes in Taurus Funds Management and agricultural private investment manager, Argyle Group.

Presiding over that consolidation has also been Regal’s chair, Mike Cole, who spent almost 13 years as Platinum’s chairman, before joining Regal in 2020. Cole knows Platinum’s co-founder Kerr Neilson well, as the two also worked together at Bankers Trust before Platinum.

Cole is an experienced hand at consolidating funds management businesses. In 2014, he was the chair that presided over the merger of the NSW government funds management activities, pulling together State Super, and funds of NSW Treasury Corporation, and the old NSW Work Cover.

However, the kingmaker in the Regal bid for Platinum will be Neilson, who owns 21.5 per cent of the asset manager. In 2022, Neilson quit Platinum’s board in frustration, stating it wasn’t heeding the changes he thought were required to stem Platinum’s decline.

In early 2023, he effectively put his Platinum stake up for sale. But after some of the changes he agitated for were made at Platinum, Neilson did an about-face. His stake was no longer for sale, and in April this year, Neilson told this masthead he wasn’t interested in Platinum being merged with another group, where the outcome was “just to smash companies together and take out costs”.

But things can always change again, especially when Regal’s bid includes a sweetener that allows Platinum shareholders to be paid a fully franked special dividend – from its own cash reserves – of 24¢ per Platinum share. Neilson did not respond to calls to comment on the bid, nor did Platinum co-founder Andrew Clifford, who is the asset manager’s co-chief investment officer. King also did not respond to interview requests, and Cole was not taking calls.

Goldman Sachs analyst Julian Braganza had a sell recommendation on Platinum before the Regal bid, and a target price of $1.

In a note to clients, he said the global equities fund manager was a sell because of its weak performance, particularly in its international fund, and also because it offered relatively less diversification compared with the other fund managers in terms of strategy and channel mix.

As well, Braganza said Platinum’s performance fees were weak, there had been consistent monthly net outflows of funds, and that Platinum’s group cost-to-income ratio had increased, reflecting its lower funds-under-management levels.

Platinum’s funds under management were $12.23 billion at the end of August, compared with $16.68 billion a year earlier. Regal Partner’s funds under management are about $16.5 billion.
Platinum’s share price has slumped 21 per cent in the past year, compared with a 43 per cent increase in Regal’s share price.

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