VGI Partners has confirmed it has signed a non-binding term sheet with Regal Funds Management in relation to the proposed merger between the two firms.
As part of the deal, VGI would acquire 100 per cent of Regal in consideration for the issue of new ordinary shares in VGI to existing Regal shareholders.
The merged entity would be made up of approximately 60 per cent Regal shareholders and 40 per cent VGI shareholders after adjusting for cash, liquid assets and other investments.
In a statement to the ASX, VGI said that the merger “would combine two of Australia’s most recognised and successful hedge fund managers and create a market-leading provider of alternative investment strategies with total funds under management of over A$6 billion”.
Before entering into a definitive agreement on the proposed merger, both firms must complete confirmatory due diligence, negotiate the terms of a binding merger implementation agreement and receive final board approvals.
The deal would also require the approval of VGI shareholders if a merger implementation agreement is entered into.
VGI said that the proposed merger had the potential to deliver a number of benefits for its shareholders “with exposure to a diversified and growing platform of hedge fund, private market and real asset investment strategies for institutional, high net worth and retail investors in Australia and offshore”.
The firm said that the deal would combine the “deep industry experience, networks and the long investment track record” of VGI’s Robert Luciano and Regal’s Philip King and their respective investment teams.
Other benefits identified by VGI include leveraging complementary client profiles and relationships across the combined group and accessing Regal’s highly developed corporate platform and business support network.
Additionally, the firm said the proposed merger would “provide an opportunity for Robert Luciano and the VGI investment team to leverage additional resources from the merged group, including Regal’s extensive investment capability and track record investing in Asian equity markets and private unlisted investments”.
VGI said it had granted Regal a six-week exclusivity period on customary binding terms which include no shop, no talk and no due diligence restrictions, and VGI said it must notify Regal if it receives a competing proposal.
In a separate statement to the ASX, VGI also announced the resignation of its CEO Jonathan Howie, who will depart the firm to pursue new opportunities.
VGI said that Mr Howie remained committed to assisting the firm with activities related to its proposed merger over the coming months.
“We thank Jonathan for his contribution to VGI Partners over the past year and wish him the very best in his future endeavours,” said VGI executive chairman Robert Luciano.
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.