Morgans gives Regal Partners 'add' rating on FUM growth
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The news: Morgans analysts have began coverage of Regal Partners with an 'add' rating, forecasting continued growth in funds under management (FUM) for the ASX-listed alternatives investment manager.
The numbers: Morgans commenced its coverage of the stock with a target price of $4.70 per share.
Regal shares were down 1% to $3.62 by 3:10pm AEST, having gained more than 27% in the last month since the Sydney-based fund manager agreed to acquire Merricks Capital.
The analysts noted that strong investment performance, fund inflows and acquisitions have seen Regal grow FUM to $15.1 billion, up 133% per year since June 2022, when Regal Funds Management merged with VGI Partners.
Morgans also said that domestic alternative fund managers (21.4x) attracted higher multiples than equity managers (11.4x). Offshore alternative managers, they said, traded at 22.5x, while they estimated Regal to trade at 14x.
Alternatives were also under allocated within Asia Pacific, accounting for around 9% of GDP compared to 26% in the US and 16% in Europe.
Morgans set its CY24 NPAT estimate at $98.6 million, an increase of 200% compared to the prior corresponding period, reflecting full-year contributions from the acquisitions of Taurus Funds Management and PM Capital in late CY23, and the partial contribution of Merricks Capital, expected from July.
The context: The analysts said they believe Regal is well-positioned to expand its portfolio of fund managers and strategies, achieve greater scale, and deliver consistent recurring earnings.
The source: Morgans research
