Platinum Asset Management tumbles in the worst day in one year as key client shrinks mandate

Shares plunge to near record lows after the investment manager reveals that one of its top clients is planning to slash the size of its mandate. Platinum will now seek to cut costs by $25m.

Platinum CEO Jeff Peters has announced plans to cut costs by $25m. Picture: Adam Yip

Investment manager Platinum Asset Management has fallen by as much as 22 per cent to near record lows after warning it expected to receive partial redemptions of at least $1.4bn as one of its largest clients looks to cut the size of its mandate.

The $18m revenue impact comes as Platinum revealed late on Tuesday that it had identified at least $25m in annual savings through “both people and non-people costs” reductions.

Shares in Platinum were down by as much as 22 per cent to $1.01 on Wednesday — the sharpest fall for the listed fund manager in more than a year. Platinum ended trade down 21.1 per cent at $1.03.

Platinum said it expected to receive partial redemptions of at least $1.4bn from its institutional and wholesale business over the coming month, with one large client indicating that it intends to rebalance its exposure away from benchmark agnostic global equity managers.

“We do not expect the account to close, but rather to see a reduction in mandate size. These events, together with some other institutional account changes anticipated to take place over the coming months, are likely to result in a reduction in annualised fee revenue for the company of approximately $18m per annum,” Platnium said.

“Importantly, when determining the company’s expense reduction target as outlined above, we factored into our modelling the possibility of such revenue reductions and the potential impact on the company’s profit margin.”

Platinum, like many other fund managers, is under pressure to lower fees for clients, as cheaper passive managers, particularly those structured as exchange traded funds, lure investors away.

Last month, Platinum announced a turnaround program that included short term action to realign its expense base with sluggish revenue conditions. The group said on Tuesday it had identified at least $25m in annualised run rate savings, which represents a 26 per cent reduction in its annualised half year expense base of $96m.

While the savings are unlikely to generate a material impact on its annual results which will be released in August, the 2025 financial year will show more of the effect of the changes being undertaken via the simplification of its product range, including rationalising its offshore distribution efforts.

Expense reductions will also result from the expected simplification of the company’s product range, including the rationalisation of Platinum’s offshore distribution efforts. Although funds under management are expected to reduce by $200m as a result of the initiatives, the impact on profit is likely to be positive once cost savings have been realised.

Chief executive Jeff Peters said the company had acted “swiftly” to implement the changes required as part of the reset phase.

“I would like to reiterate my firm belief that Platinum will emerge from this challenging phase as a revitalised business that is better able to leverage its strong brand and talented team for the benefit of its clients,” he said.

In February, the asset manager reported a 5 per cent fall in net income to $35.6m and a reduction in its interim dividend to 6c a share from 7c a year earlier.