In an ASX listing on Monday, Platinum confirmed that having completed its due diligence, Regal has decided not to pursue the acquisition of the fund manager.
“Regal’s growth-focused strategy remains unchanged. 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,” Regal said.
In September, Regal submitted an acquisition proposal to Platinum Asset Management, which was promptly rejected on the 26th of that month. However, by 4 October, Platinum had allowed Regal an extended period for mutual due diligence, signalling, at the time, openness to a potential revised offer with improved terms.
In a separate listing, Platinum assured that sufficient working capital remains to support ongoing growth initiatives.
The fund manager also stressed that it is doubling down on its turnaround strategy, focusing on cost control, remuneration redesign, product rationalisation, and an investment process review. All initiatives, it said, are designed to stabilise and reset the business in order to return to a growth footing.
Highlighting its pivot to product diversification, Platinum unveiled a strategic partnership with US-based investment firm GW&K.
“As we move forward with the next phase of the turnaround, the investment area is a key priority. We are also focused on managing costs in line with our funds under management, as well as product diversification and the buildout of our sub-advisory partnerships under our new Platinum Partner Series,” Platinum said.
“To this end, we are pleased to announce that we have secured our first partnership with GW&K, a leading US-based small-cap specialist with $86 billion AUD in funds under management and over 50 years of market experience. Under this arrangement, we have been appointed to exclusively distribute GW&K’s global small-cap strategy to the Australian retail market.”
On Friday, Platinum revealed its net outflows reached $841 million in November. The figure, it pointed out, included the loss of an institutional mandate of $537 million and net outflows from the Platinum Trust Funds of approximately $239 million.
As a result, Platinum’s FUM stood at $10.96 billion on 30 November, down from $12.2 billion.
The fund manager’s share price dipped by over 13 per cent on Monday to close at some 90 cents.
Ongoing M&A likely
Earlier this year, Shaun Ler, equity analyst at Morningstar, told InvestorDaily that while upcoming rate cuts may offer short-term relief to asset managers, the sector faces long-term challenges from high interest rates, with underperforming funds at risk of closure and ongoing consolidation likely through mergers and acquisitions.
But despite the challenges, Ler highlighted a potential silver lining, suggesting that asset managers could thrive by adapting and innovating.
“I think there’s always room for active management. The demand will always be there, they have a role to play. But they really need to reinvent themselves,” Ler said.
“As an asset manager, you can still do business, but you need to be brilliant.
“Established organisations, old school fund managers tend to have that old school mentality about how exclusive their products are or how sticky their clients are. I think that needs to change and managers really need to adapt.”
He also cautioned fund managers pursuing mergers, noting that “not all fund manager consolidations have gone smoothly”. Citing Perpetual’s 2023 acquisition of Pendal as an example, Ler argued that the similarity in investment styles and products between the two firms hindered value creation.
He stressed that successful mergers require complementary differences, such as distinct asset classes, distribution teams and investment strategies, to generate revenue synergies and cost efficiencies.
