Philip King’s Regal Partners Ltd offered to buy rival Platinum Asset Management Ltd, as the hedge fund presses on with an expansion push that has seen assets more than triple in just two years. 

Sydney-based Platinum received an unsolicited and non-binding proposal from Regal to acquire all of its shares via a scheme of arrangement, the company said in a statement on Tuesday. Regal also confirmed the bid in an exchange filing. 

Under the offer, Platinum shareholders would receive 0.274 Regal shares for each Platinum share held. That equates to an offer of A$0.9042 (US$0.61, or RM2.60) a share, a deal size worth around A$526 million (US$355 million), based on Monday’s close, according to Bloomberg calculations. Platinum also said it would be permitted to pay a fully franked special dividend of A$0.24 a share to its shareholders from its own cash reserves.

Platinum shares surged as much as 16.2% on Tuesday after the offer, and were trading at A$1.0925 as of 3:26pm in Sydney. This trims the stock’s losses this year to about 18%. Regal shares fell nearly 1%. 

Regal manages almost A$17 billion in funds - up from A$4.7 billion two years ago - with offices in Sydney, Singapore and New York. From a mainly long-short equities fund that started as a four-person team in 2004, it has expanded into an investment manager across private markets and alternatives.

The firm has been on an acquisition mission, buying private credit firm Merricks Capital this year, after acquiring hedge fund VGI Partners and making a A$1.7 billion takeover offer for Perpetual Ltd in 2022. 

Regal’s latest plan illustrates the growing consolidation among Australia’s fund managers, as investors move away from active management, increasing the need for scale. It has also garnered pace in the global funds management industry this year, as firms eye takeovers to beat out competitors.

“The structure of the deal might deter management and shareholders, as the cash portion is funded by Platinum,” said Jamie Hannah, Sydney-based deputy head of investments and capital markets at Van Eck Associates Corp. Platinum shareholders “might feel like the offer is opportunistic based on the low share price”, though it’s also a reflection of the asset flows, he said.

There’s no guarantee that discussions with Regal will progress, or that due diligence access will be granted, Platinum said. 

Platinum, which focuses on global equities, reported a 15% drop in average funds under management from a year earlier in its latest earnings, with net income down 44%. The firm also saw net outflows of A$331 million for August.

  - Bloomberg