The firm has made non-binding, indicative proposals to acquire 100 per cent of the two LICs – Platinum Capital (PMC) and Platinum Asia Investment (PAI) – by a scheme of arrangement with its PM Capital Global Opportunities Fund (PGF).
It also said the investment team changes at Platinum announced this week could cause “potential uncertainty” for shareholders in the vehicles as well as the investment underperformance. The staffing changes have seen co-chief investment officers Andrew Clifford and Clay Smolinski both step down from their roles.
“The proposals represent an opportunity for PMC and PAI shareholders to exchange their shares for PGF shares at material premium to recent share prices,” it said.
“PGF considers that the proposals reflect compelling, superior alternatives to PMC’s proposed scheme of arrangement with Platinum International Fund (PIXX) and PAI’s proposed scheme of arrangement with Platinum Asia Fund (PAXX) and has been seeking to engage with the PMC and PAI boards.
“The PGF board also believes that the proposals will lead to a larger capital and shareholder base for PGF which is expected to provide PGF shareholders with greater secondary market liquidity.”
Platinum had announced last year it would be merging the two LICs into its quoted managed hedge funds.
Its Platinum Asia LIC would enter a scheme of arrangement to merge with the open-ended Platinum Asia Fund (Quoted Managed Hedge Fund), which is $85 million in size. Meanwhile, the Platinum Capital LIC will enter a scheme of arrangement to merge with the open-ended $284 million Platinum International Fund (Quoted Managed Hedge Fund).
This option would allow shareholders to continue to access Platinum’s investment strategy via an ASX-quoted vehicle with the same investment objective as the LIC and hold units that will trade close to their net asset value.
However, since being announced last July, there have been delays to this proceeding due to the need for Platinum to await tax guidance from the Australian Taxation Office and CEO Jeff Peters forecast it could take until July 2025.
There is no certainty that either proposal from PM Capital will lead to a transaction and it will be conditional on the PGF board determining the transaction is in the best interests of shareholders.
