Platinum Asset ends talks with Regal and announces special dividend

Platinum Asset Management has announced a special dividend for shareholders, after Regal Partners walked away from a potential takeover of its smaller rival.

Platinum Asset Management and its largest shareholder, Kerr Neilson, says it will continues to have sufficient working capital.

Platinum Asset Management has gone into damage control, announcing a special dividend for shareholders, after Regal Partners walked away from a potential takeover of its smaller rival.

The beleaguered global fund manager founded by legendary fund manager Kerr Neilson – its largest shareholder – says it will continue to have sufficient working capital to pursue its growth initiatives after paying a fully franked special dividend of 20c per share.

But the special dividend was cold comfort for investors, as Platinum’s share price fell as much as 14 per cent to a record low of 90c after trading resumed on Monday.

“Platinum remains fully focused on executing its restructure and turnaround strategy and has so far illustrated momentum in the areas of cost control, remuneration redesign, product rationalisation and a review of the investment process, all initiatives designed to stabilise and reset the business in order to return to a growth footing,” the company tells the ASX.

On September 26 Platinum rejected an indicative, non-binding and conditional proposal from Regal to acquire all of its shares via a scheme of arrangement which was equivalent to $1.10 a share.

On October 4 it granted Regal a period of non-exclusive, mutual due diligence to allow Regal to improve the value and terms of its proposal, and to allow Platinum to assess the absolute and relative value of Regal share consideration and the costs and benefits of any combination.

“Since that time, the respective parties have conducted an initial period of mutual due diligence which has now concluded,” Platinum said.

“Platinum advises that discussions with Regal have ceased, removing the uncertainty that has persisted since Platinum rejected Regal’s initial proposal.

Platinum shares closed at $1.045 on Friday.

The share price has fallen 21 per cent, year to date, versus an 11 per cent rise in Australia’s benchmark S&P/ASX 200 share index.

On Friday, Platinum said it suffered a $841m outflow of funds under management in November, including the loss of an institutional mandate of $537m and net outflows from the Platinum Trust Funds of about $239m.

Total FUM fell about 6.9 per cent to $10.96bn.

Fund outflows have plagued Platinum over the past two years and culminated in a string of personnel changes, including the appointment of asset management stalwart Jeff Peters as chief ­executive.

He took the reins early this year and has outlined a turnaround strategy which includes plans to stabilise Platinum by stemming outflows, rationalising products and boosting performance.

Regal’s offer in September represented a modest 11.5 per cent takeover premium to its share price at the time and implied an enterprise value to earnings multiple of four times.

But Platinum finished August 2024 with a FUM balance 15 per cent below its average of the six months to June and 20 per cent below the financial year 2024 ­average.

After Friday’s announcement, FUM had declined 10 per cent since August.

Investment performance has been weak.

The flagship Platinum International fund returned minus 3.3 per cent in November 2024 versus a 4.3 per cent rise in the MSCI World Index.

“The ability for Regal to make a transaction accretive rested heavily on what level Platinum’s FUM could be stabilised at,” said Evans & Partners analyst Olivier ­Coulon.

“While Regal has not commented on why it is not pursuing a transaction, we suspect the continued outflows and negative relative performance of Platinum may have reduced Regal management’s confidence in enabling any potential combination to be value accretive.” Fund managers both in Australia and offshore are being hit by a spate of factors including persistent downward pressure on fees, a shift to cheaper passive investment styles and mergers between their larger customers.

The global fund manager also flagged its first partnership with GW&K, a leading US-based small cap specialist with $86bn in funds under management and over 50 years of market experience.

Under this arrangement, Platinum has been appointed to exclusively distribute GW&K’s global small cap strategy to the Australian retail market.