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Platinum reports substantial outflows ahead of expected large dip in April

4 minute read

Platinum Asset Management has reported its largest outflows since August 2023, following the loss of a large mandate and the commencement of an arduous recovery with a cost restructure.

Just weeks after announcing it lost $1.4 billion in mandated funds from “one large” client, Platinum reported net outflows of approximately $527 million, including outflows of some $467 million from the Platinum Trust Funds.

The firm, in an ASX listing, said total funds under management dipped from $15.6 million at the end of February to $15.5 million on 31 March.

Providing further context behind its latest outflows, Platinum said: “These outflows reflect approximately $200 million of the $1.4 billion of expected outflows announced by Platinum to the ASX on 26 March 2024, with the balance of these outflows expected to occur during April 2024.”

On 26 March, Platinum clarified the client who pulled the mandate resulting in outflows worth $1.4 billion had decided to “rebalance its exposure away from benchmark agnostic global equity managers”.

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

These events, the fund manager noted at the time, 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 26 March ASX announcement also included information regarding the progress of the firm’s “turnaround program”, which was first declared 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. This savings target represents a 26 per cent reduction in the company’s annualised half-year expense base of approximately $96 million.

However, the fund manager conceded the 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.

Maja Garaca Djurdjevic

Maja Garaca Djurdjevic

Maja's career in journalism spans well over a decade across finance, business and politics. Now an experienced editor and reporter across all elements of the financial services sector, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies.