Platinum Asset Management turns down Regal plans to restore investment house to ‘former glory’

A combined operation would have $29bn in funds under management, but Platinum says Regal’s offer undervalues its business.

Platinum Asset Management remains open to a better takeover offer after it rejected a bid from Regal Partners, saying the current terms of the proposal undervalue Platinum.

The $12.2bn investment manager, founded 30 years ago by billionaire stockpicker and biggest shareholder Kerr Neilson, told investors that “the current terms of the Regal proposal undervalue Platinum”.

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 that the offer was not in the best interests of its shareholders and therefore the board had no choice but to reject it.

“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 and recognise appropriate value for Platinum shareholders,” Platinum said on Thursday.

Based on the last closing price of Regal shares prior to the announcement of the Regal proposal, the Regal proposal has an implied value of $1.10 per Platinum share.

Kerr Neilson. Picture: Hollie Adams

Sources close to Platinum told The Australian on Thursday that it could be the start of negotiations with Regal Partners to find a suitable price. It comes as other parties including Geoff Wilson’s Wilson Asset Management consider their stance.

Washington H. Soul Pattinson chief executive Todd Barlow ruled out the possibility of his investment house making an offer, after it made a failed bid for Perpetual’s corporate trust and wealth assets after acquiring a 15 per cent stake.

“We have no plans to make an offer. We invested in Perpetual at the time because we saw there was a potential uplift by separating out parts that were reflected in the market. That was simply a one-off, opportunistic thing that we looked at,” Mr Barlow said on Thursday after reporting annual financial results.

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 $29bn in FUM.

The decision by Platinum’s board came as it considered a range of factors including its assessment of the standalone inherent value of Platinum in a change of control context, with reference to its current turnaround strategy, outlook, planned future growth initiatives and available capital management strategies.

It also weighed the conditional nature of the Regal proposal, with conditions including the granting of due diligence, the board recommending the Regal proposal to Platinum shareholders and entry into a mutually acceptable scheme implementation deed which would also be subject to a number of customary conditions such as shareholder, court and regulatory approvals.

Regal’s share price lifted 2.3 per cent to $3.60 on Thursday, taking total gains in the past 12 months past 45 per cent. Platinum closed Thursday higher by 1.8 per cent at $1.15, but remained down by 14.4 per cent in the past year, and nearly 30 per cent prior to the disclosure of the takeover bid on September 16.

Its funds under management fell 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.