Regal Partners has announced that it has entered into an agreement to buy investment management company PM Capital in a deal worth up to $150 million.
After discussions between the two firms were revealed earlier in the week, Regal confirmed in an ASX announcement on Friday (3 November) that it will acquire 100 per cent of the issued share capital of PM Capital, which is employee and founder-owned.
The $150 million purchase price includes upfront cash consideration of $20 million and scrip consideration of approximately $130 million in converting shares.
PM Capital was established in 1998 by its current chairman and chief investment officer Paul Moore and focuses on global long/short equities and fixed income strategies.
It services a diverse range of Australian retail investors and financial advisory groups with more than $2.7 billion of funds under management (FUM) as at 30 September. Regal’s total group FUM is expected to reach $10.8 billion on completion of the deal.
“The addition of PM Capital to the Regal Partners group will provide a further extension to Regal’s existing global equities and credit investment capabilities,” commented Regal Partners CEO Brendan O’Connor.
“Paul Moore and his highly experienced investment team are well-recognised as one of Australia’s leading long/short equity and fixed income managers, with a strong track record of successfully managing capital for investors for over 25 years.
“We are delighted that Paul and his team have chosen to partner with Regal and we look forward to meaningfully contributing to the growth of their business over the years ahead.”
According to Regal, the acquisition is anticipated to be accretive to its earnings per share in 2024 before any synergies. The cash consideration is expected to be funded by a combination of existing cash sources and investments on Regal’s balance sheet.
Mr Moore said that the deal will allow PM Capital to leverage Regal’s corporate and business support infrastructure and distribution capabilities, and give the firm the “best practice discipline” of a non-executive board.
“Most importantly, this partnership will allow me to minimise my non-investment distractions, and thereby allow the PM Capital Investment team to focus on what matters most, investing. This has been the most important factor that I personally have considered,” he added.
“There will be no change to PM Capital’s investment philosophy and process. Over 35-plus years in the industry, I suspect my DNA is well understood – investing and independence and a willingness to stand firm irrespective of short-term market pressures.”
The acquisition comes after Regal agreed to acquire a 50 per cent stake in Taurus Funds Management on Wednesday for an upfront consideration of $28 million in cash.
Taurus is a specialist provider of financing solutions to global mid-tier and junior mining companies, and currently manages $2.3 billion in committed and drawn capital from its client base, which is mostly made up of US institutional inventors and pension funds.
“Taurus represents an exciting and accretive opportunity for Regal Partners to further expand its existing investment capabilities across the global resources sector,” said Mr O’Connor.
“The addition of Taurus further supports Regal Partners’ aim to be the leading provider of alternative investment strategies in Australia and Asia, as well as increasing the group’s exposure to attractive offshore markets, including North America.”
In September, Regal abandoned its plan to acquire Pacific Current Group, two months after the bid was first publicly unveiled.
At the time, Regal said it had been “consistently disappointed with the engagement by the Pacific Current board” since submitting an initial non-binding indicative proposal (NBIO) in March.
“Based on the manner in which Regal’s re-affirmed NBIO has been received, Regal has little confidence in the process being run,” it said.
“For these reasons alone, Regal has formally withdrawn its NBIO to acquire Pacific Current.”
