Regal confirms bid for Platinum AM

In a further sign of the pressure being encountered by active fund managers, Platinum Asset Management has confirmed media speculation that it had been the subject of a takeover bid from Regal Partners.

In an announcement released on the Australian Securities Exchange (ASX) Platinum said it had received an unsolicited, non-binding and indicative proposal from Regal to acquire all of the shares in Platinum via a scheme of arrangement.

It said the Platinum board is 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.”

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

It said the consideration would be reduced for Platinum’s FY24 final dividend of $0.04 per Platinum share and any other dividend paid by Platinum other than the permitted $0.24 per Platinum share special dividend.

The Platinum Board said that as part of its consideration of the bid, it was having regard to the absolute and relative value of the Regal share consideration being proposed, the potential business costs and benefits and any combination, as well as Platinum’s own capital management plans and alternative strategic options.

For its part, Regal confirmed it had made the bid for Platinum and said that the two firms “have been working together to firm up the merits of the combination”.

It emphasised the discussions are “preliminary and incomplete”.

The confirmation of the Regal bid follows on from Platinum last week announcing a decline in funds under management in August with outflows of approximately $331 million, bringing funds under management to $12,227 million.

The company attributed the outflows to poor relative performance.

The once high-flying Platinum has faced multiple challenges over the past four years and most recently saw the departure of its chief executive, Andrew Clifford, who has been succeeded by Jeff Peters.

Peters was tasked with overseeing a “turnaround program” with initial focus on expense reduction.

The company reported a $43.6 million decline in statutory profit before tax on the back of a 14.9% decline in total revenue and other income.