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Platinum announces mandate loss, start of arduous recovery with cost restructure

By Rhea Nath
4 minute read

As it attempts to claw back to its former glory, the asset manager has provided an update on a turnaround program that commenced in February.

In an ASX listing on Tuesday, Platinum Asset Management disclosed it lost $1.4 billion in mandated funds from “one large” client who indicated to the firm that it “intends to rebalance its exposure away from benchmark agnostic global equity managers”.

Pointing out that it does not “expect the account to close”, Platinum said there will be a “reduction in mandate size”.

These events, the fund manager noted, together with some other institutional account changes, are likely to result in a reduction in annualised fee revenue for the company of approximately $18 million per annum.

The ASX announcement also included information regarding the progress of the firm’s “turnaround program”, which was announced on 29 February.

Platinum disclosed that an initial review had been completed, with the company targeting at least $25 million in annualised run rate savings as it continues to fend off outflows and attempts to revive a tanking share price. This savings target represents a 26 per cent reduction in the company’s annualised half-year expense base of approximately $96 million.

According to the fund manager, these savings will only begin to be realised during the last quarter of the 2024 financial year and are unlikely to generate a material impact on the company’s reported FY2024 profit, with the bulk of savings being progressively realised during the 2025 financial year.

Commenting on these changes, Jeff Peters, who stepped in as Platinum chief executive at the tail end of 2023, said: “In late February, we outlined a strategy to reset and position the business for future growth. I am pleased to be able to report that we are acting 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.”

The firm outlined that savings would encompass both people and non-people costs with one-off restructuring charges (including non-cash charges) to be separately identified in the company’s financial report, with the board expected to consider the nature of any non-cash charges for the purposes of any FY24 or FY25 dividend determination.

Expense reductions will also be made, Platinum said, particularly from the expected simplification of its product range, including the rationalisation of its offshore distribution efforts.

Although funds under management are expected to reduce by approximately $0.2 billion as a result of these initiatives, Platinum said the impact on profit is likely to be positive once related direct and indirect cost savings have been realised.

Earlier this month, the asset manager announced its intentions to “revitalise” the company in its half-year results.

Measures announced at the time included a review of its product offerings and distribution channels, both onshore and offshore; a review and reorganisation of its investment research function, portfolio construction and risk management processes, and existing product design; and a review of its remuneration framework.

Weeks after the announcement, in February, the beleaguered asset manager reported its largest outflows since August 2023 of $285 million, which included $240 million in outflows from its Platinum Trust funds.

While overall funds under management (FUM) during the month rose from $15.1 billion to $15.5 billion, the sum was down 18 per cent from total FUM a year prior when it stood at $18.5 billion.

At close on 27 March, Platinum’s share price lost 21 per cent, dropping to $1.03.

Since the beginning of the calendar year, the firm’s share price has fallen 24 per cent.

Platinum has seen a slew of people changes to its board and leadership team in recent time, alongside the appointment of Peters following a global search last year. Changes included co-founder Andrew Clifford stepping back as chief executive after five years and giving up his seat on the board, although he remains at the firm as co-chief investment officer.

Directors Elizabeth Norman and Andrew Stannard, too, stepped down from the board at the end of 2023.