Platinum shares jump after L1 Capital merger terms confirmed
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More news: Shares in Platinum Asset Management rallied after the investment manager announced binding merger terms with L1 Capital.
Platinum shares were up 3.5% to 51.8 cents at 2pm AEST, having dropped around 50% over the last 12 months.
The company also announced this morning that CEO Jeff Peters will receive an extra payment of $670,000, in recognition of his work on the merger, and flagged that expected costs for its turnaround program have increased from $30 million to $40 million.
Platinum CEO dodges question on pay, reveals merger details
More news: On an investor call, Platinum and L1 Capital provided more details on the proposed merger and fielded questions from the market.
They revealed Jeff Peters will remain CEO and managing director of the board with him making up the management board alongside L1 chief operating officer Joel Arber and Platinum director Andrew Stannard.
Guy Strapp will retain his position as chair and Arber will become chief operating officer of the merged entity. L1's head of legal and compliance Jane Stewart will take a board seat alongside Rachel Grimes from Platinum and two other yet-to-be-nominated directors from L1.
If successful, shares will be issued to L1 shareholders who will own 74% of the merged entity while L1's investment team could provide some input on Platinum products.
L1 co-CIO Mark Landau said there would be scope to expand the different teams and that they would have some "significant announcements" in the coming months around that.
Higher turnaround costs from Platinum's side meanwhile were intended to clean up the P&L sheet before the merger.
What they said: Addressing concerns that he and L1 co-founder Raphael Lamm would be distracted from their portfolios, Landau said they would not be involved in the day-to-day responsibilities of the merger.
"At the moment, roughly 10 to 15% of Raf's and my day is spent on managing the business. At the moment, we're the joint managing directors at L1 capital, and as part of this deal, we'll be stepping back from that management responsibility. So if anything, there'll be an even greater focus on investments," Landau said.
Lamm said he thought two sides could "build something really special" as a result of the merger, and indicated that he and Landau would remain committed long-term shareholders and "not be a source of short to medium term liquidity".
"In the near term, I think people are going to find a very attractive, listed vehicle with strong earnings growth and quite a sticky shareholder base," he said.
In an awkward moment, Peters was asked to justify his one-off $670,00 unconditional bonus associated with the merger despite significant fund outflows.
"You arrest outflows by by delivering great performance. And we believe that that this merger will deliver great performance, and clients will will see that, and that will will ripple through in terms of their experience and and staying with us," Peters said, declining to comment on his pay.
Peters also said he had positive feedback from institutional clients since the merger was announced.
"The prevailing discussions that we've had with clients over the last couple of months since the merger was initially discussed has been optimism and looking forward to seeing where we come out post completion. So if I remain optimistic about our client base, I think that they're going to find a set of very good solutions, and as a result, hopefully we'll get back to growth in that client base."
Platinum seals merger terms with L1 Capital; hikes turnaround cost estimate
The news: Investment manager Platinum Asset Management has agreed binding merger terms with rival fund manager L1 Capital, following the announcement of their proposed merger, announced in May.
Platinum also flagged that implementation costs for its turnaround program will now total $40 million, up from the $30 million figure previously announced.
The numbers: Under the terms of the merger, L1 Capital shareholders will hold 74% of the merged group, with Platinum shareholders holding the remaining 26%.
After the market closed on Monday, Platinum also reported $428 million in net outflows for the month of June, as funds under management (FUM) dropped 3.4% to $8.06 billion.
The majority of Platinum's monthly outflows were attributable to $427 million in net outflows from Platinum Trust Funds.
In addition to the outflows, Platinum funds will also pay distributions of around $151 million in July, which will be reflected in next month's FUM figures.
The company also said it is making progress on reducing expenses, with full-year operating costs — excluding turnaround costs — expected to be $75 million.
Platinum's FY26 cost savings target has now been increased from $5 million to between $10 million and $15 million. Investment gains for FY25 are expected to range between $14 million and $16 million.
Separately, the company announced that its CEO and managing director Jeff Peters will receive an additional payment of $670,000, in recognition of his work on the merger with L1. The entitlement will be payable on 31 December and is not conditional on the merger completing.
Peters will also receive $100,000 in relocation costs should his employment be terminated following the merger.
The context: Platinum said the merger with L1 is expected to create a market-leading investment manager with total funds under management of $16.5 billion. It is intended that Platinum will be renamed and the merged entity will remain listed on the ASX, with a new ticker.
What they said: "After careful consideration, we believe the combination with L1 Capital provides a catalyst to deliver strong outcomes for shareholders and investors, creating a high-quality manager with a strong heritage, world-class investment talent and scale," said Platinum chair Guy Strapp.
