Platinum Asset Management grants access to Phil King’s Regal Partners as takeover heats up

Phil King’s investment house to undertake due diligence as it mulls whether to make a fresh bid as its funds under management surge.

Phil King a fund manager with Regal Fund Management. Jane Dempster/The Australian.

Platinum Asset Management has granted non-exclusive, mutual due diligence to Regal Partners as Phil King’s investment house lays the groundwork to make an improved takeover bid.

The $12.2bn investment manager founded 30 years ago by biggest shareholder Kerr Neilson, rejected an initial bid from Regal after it told investors last week that “the current terms of the Regal proposal undervalue Platinum”, but left the door open for further negotiations.

Since then Regal has approached Platinum with a request that it be granted due diligence in order to allow it to submit an improved revised proposal.

Platinum said opening of the books will allow Regal to improve its bid and grant it access to assess the absolute and relative value of Regal share consideration and the costs and benefits of any combination.

“The board remains open to considering control proposals for Platinum from Regal or other third parties, but will only progress any such proposals if they are on terms that deliver appropriate value for Platinum shareholders,” Platinum said.

Platinum sources told The Weekend Australian that due diligence was a positive development and demonstrated that Regal was serious about an improved bid. The feeling was that non-exclusive due diligence would also force any other parties to come to the table.

Parties including Geoff Wilson’s Wilson Asset Management and Challenger have been mentioned as possible groups that could throw their hats in the ring.

Phil King’s Regal Partners had offered 0.274 of its shares for every Platinum share and a fully franked special dividend of 20c per Platinum share, looking to restore Platinum to its former glory following a turbulent period.

Platinum said while the offer was not in the best interests of its shareholders, “the board remains open to considering control proposals for Platinum from Regal or other third parties”.

Regal on Friday said it had signed a confidentiality deed and will shortly enter a period of due diligence with Platinum as it mulls the next step in a wish to take over the investment house.

“The purpose of this diligence is to further establish the merits and value of the proposed combination and determine whether any improved offer would be in the best interest of, and accretive to, Regal shareholders,” the company said.

“The discussions remain preliminary and incomplete, and there is no certainty that they will lead to an improved offer or a transaction.”

Regal Partners sees a play for Platinum as another stepping stone to creating scale and driving growth in the group, which could help shareholders maximise returns over the long term.

If Regal were to make another bid and be successful, it would be its biggest M&A deal to date, and add substantial muscle. It has grown funds under management by $5.6bn since its reverse takeover of Rob Luciano’s hedge fund VGI Partners in 2022 for $16.5bn.

A combined Regal and Platinum would have just over $30bn in FUM.

It comes as Regal Partners saw its funds under management increase to $17.2bn, a 41 per cent jump from the $12.3bn at June 30, and a 4 per cent rise versus the $16.5bn of pro forma FUM at June 30 when Merricks Capital Argyle Group transactions are impacted.

Platinum has seen its funds under management decrease 27 per cent in the year to August to $12.2bn. Mr Neilson is the largest shareholder in Platinum, with 21.7 per cent of all shares on issue. Other major shareholders include Vanguard, Morgan Stanley, Insignia Financial and AMP.

Regal’s share price lifted 0.3 per cent to $3.49 on Friday, taking total gains in the past 12 months past 34 per cent. Platinum gained 0.8 per cent to $1.22 in morning trade, but remained down by 12 per cent in the past year, and nearly 30 per cent prior to the disclosure of the takeover bid on September 16.