Regal Partners acquires PM Capital
Regal Partners has announced an acquisition of PM Capital which will create an investment management company with $10.8 billion in funds under management (FUM) and a core focus on global long/short equities and fixed income strategies.
The upfront consideration for the acquisition will be $20 million in cash, subject to net debt and working capital adjustments, with deferred, and largely conditional, consideration consisting of the issuance of approximately $130 million of converting redeemable preferences shares in RPL (“converting shares”), the firm said.
In the announcement made to the Australian Securities Exchange (ASX), Regal said it expected the acquisition to be accretive to its earnings per share in 2024, pre any synergies.
PM Capital was established in 1998 by its current chairman and chief investment officer, Paul Moore, and services a diverse range of Australian retail investors and advisory groups while managing in excess of $2.7 billion of FUM across long/short equities and fixed income strategies.
As of 30 September, PM managed its Global Long/Short Equities strategy ($1.8bn) which included the PM Capital Global Companies Fund and the ASX-listed investment company, PM Capital Global Opportunities Fund Limited, the Australian Long/Short Equities strategy ($99 million) via its Australian Companies Fund and the Enhanced Yield Fixed Income strategy ($788 million) which includes the PM Capital Enhanced Yield Fund.
Regal said that the transaction rationale was based on PM Capital’s “deeply experienced, multi-award-winning investment capability”, highly complementary and well-diversified investor base, scale benefits and access to enhanced corporate, operational and distribution platform as well as strong alignment of interests.
“This new partnership will facilitate our ability to leverage Regal’s exceptional corporate and business support infrastructure and distribution capabilities that have been developed under the leadership of their chief executive Brendan O’Connor. It will also provide to PM Capital the best practice discipline of a non-executive board. I would also add that Regal, like PM Capital, invest alongside their clients and have a business owner mentality,” Moore commented on the announcement.
“Most importantly, this partnership will allow me to minimise my non-investment distractions, and thereby allow the PM capital investment team to focus on what matters most, investing.
“This has been the most important factor that I personally, have considered. There will be no change to PM Capital’s investment philosophy and process. Over 35 plus years in the industry, I suspect my DNA is well understood – investing and independence and a willingness to stand firm irrespective of short-term market pressures.”