Regal Partners calls off chase for rival Platinum Asset Management

The shine has well and truly come off Platinum Asset Management after Philip King’s Regal Partners on Monday called off its three-month pursuit of the company.

Platinum’s stock had been smashed almost 14 per cent lower by 10.45am to 90.2¢ — below levels seen before its rival made an approach in mid-September.

Regal said the confidential and non-binding all-scrip indicative proposal for a “combination” had been shelved after the hedge fund finished running the ruler over Sydney-based Platinum.

“Regal’s growth-focused strategy remains unchanged,” it said.

“Regal will continue to assess organic and inorganic opportunities prudently as and when they arise to further execute on its ambition to be a leading provider of alternative investment strategies in Australia and Asia.”

Platinum shares have spent much of the year in freefall, tumbling almost 35 per cent this year to now value the company at $608 million.

Regal’s shares were off 5.5 per cent to $3.78.

Platinum said with the uncertainty of a potential merger now removed, it had approved the distribution of a special 20¢-a-share dividend to investors.

“Platinum remains fully focused on executing its restructure and turnaround strategy and has so far illustrated momentum in the areas of cost control, remuneration re-design, 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,” it said.

Platinum — founded in 1994 by investment industry royalty Kerr Neilson, who remains a 22 per cent shareholder but is no longer part of the business — in August reported a 14.9 per cent fall in revenue for the financial year to the end of June to $185m. Net profit fell a staggering 44 per cent to $45m.

It was also revealed funds under management at June 30 had dived to $13 billion — down 25.2 per cent from a year earlier — in what the company described as a “challenging” 12 months that also saw the exit of former chief Andrew Clifford a year ago.

Jeff Peters was brought in at the start of the year to turn around the flagging business but it has since struggled to regain lost ground.

Regal manages $17.2 billion in funds — up from $4.7b two years ago — with offices in Sydney, Singapore and New York. From a mainly long-short equities fund, it has expanded into an investment manager across private markets and alternatives.

Regal got its start on the Australian Securities Exchange just over two years ago following the reverse takeover of hedge fund VGI partners. It now has a market capitalisation of just over $1b.

Chief investment officer Mr King is a co-founder of Regal and in 2019 was inducted into the Australian Fund Managers’ Hall of Fame.