Phil King’s Regal Partners prepares to launch Platinum Asset Management takeover bid

Regal Partners could become a $29bn powerhouse as it mulls a takeover bid for Platinum Asset Management amid plans by Phil King’s investment house to double down on its growth strategy with its biggest play yet.

Phil King’s Regal Partners is looking to mount a takeover bid for Platinum Asset Manager. Picture: Jane Dempster/The Australian

Phil King’s investment house, Regal Partners, is weighing up an ambitious takeover bid for Platinum Asset Management as it looks to achieve greater scale with the creation of a $29bn investment powerhouse.

The potential takeover play of the investment manager house founded 30 years ago by billionaire stockpicker Kerr Neilson comes amid a challenging period, with funds under management down 27 per cent in the past year to $12.22bn as of August.

Both Regal and Platinum confirmed to the market on Tuesday that talks were ongoing, but cautioned investors that there was no certainty of a former offer, or that a deal will take place.

Under the proposal, Platinum shareholders would receive 0.274 Regal shares for each Platinum share held. Prior to implementation of the scheme, Platinum would be permitted to pay a fully franked special dividend to its shareholders, from its own cash reserves, of $0.24 per Platinum share.

Any offer would be subject to several conditions including due diligence, the Platinum Board recommending the Proposal to shareholders, and entry into a mutually acceptable scheme implementation deed.

“Regal and Platinum have been constructively working together to firm up the merits of the combination. The discussions are preliminary and incomplete, and there is no certainty at this time that they will lead to a transaction,” Regal told the ASX on Tuesday.

Regal said that it continued to evaluate a range of organic and inorganic growth opportunities as the business continues to execute on its broader growth ambitions.

Kerr Neilson founded Platinum Asset Management in 1994 and remains the largest shareholder. Picture: Hollie Adams/The Australian

“Any potential combination would need to be determined by the Regal Board to be in the best interests of, and accretive to, Regal shareholders.”

Sources close to Regal told The Australian it wanted to restore Platinum to its former glory following a turbulent period for its target. For Regal, it saw Platinum as another stepping stone to creating scale and driving growth in the group, which could help shareholders maximise returns over the long-term.

Discussions were expected to be ongoing with Regal wanting to get the bid right instead of rushing, with one source saying silence in the next month would be seen as good news. Should Regal be successful, it would be its biggest M&A to date, and would add substantial muscle after having grown funds under management by $5.6bn since its reverse takeover of Rob Luciano’s hedge fund VGI Partners in June 2022 to $16.5bn. A combined Regal and Platinum would have just over $29bn in FUM.

Platinum said it was considering the merits of the Regal Proposal having regard to its assessment of the stand-alone inherent value of Platinum in a change of control context, including with reference to Platinum’s current turnaround strategy, outlook, and planned future growth initiatives.

“The Platinum board will also have regard to the absolute and relative value of the Regal share consideration being proposed, the potential business costs and benefits of any combination, as well as Platinum’s own capital management plans and alternative strategic options,” it said.

“In the meantime, we confirm that this should not impact our unit holders and our investment philosophy and process remain the same.”

PAC Partners institutional equity sales James Nicolaou said the proposal on the table would likely be enough to win over the support of Platinum’s board.

“It should be enough to put long-suffering Platinum shareholders out of their misery, and most likely recoup some of those losses (potentially) via Regal stock,” he said.

Barrenjoey was advising Regal, while Platinum has appointed Jefferies Australia as its financial adviser and Allens as its legal adviser.

Mr Neilson is the largest shareholder in Platinum, with 21.7 per cent of all shares on issues. Other major shareholders include Vanguard, Morgan Stanley, Insignia Financial and AMP

Regal has seen its share price lift 45 per cent in the past 12 months to $3.30. Platinum has seen its shares fall 27 per cent in the year to September 16. On Tuesday they rebounded 10.6 per cent to $1.10 on the takeover speculation.