Platinum updates on L1 merger as due diligence concludes
Platinum Asset Management has provided an update on the possibility of a merger between the asset manager and L1 Capital following a period of discussions.
It was announced in May that the two firm were in “early stage discussions” about a potential merger to create a fund manager with $18 billion combined in assets under management.
L1 Capital is a global investment manager that runs a range of long-short and international equity funds.
At the time, it was said L1 Capital shareholders would own around 75 per cent of shares in Platinum and existing Platinum shareholders would own 25 per cent. The ratio accounted for the combined entity receiving participation in performance fees relating to the first 5 per cent of absolute returns (gross performance net of management fees) generated by L1 Long Short Fund, with any excess performance fees above 5 per cent distributed to existing L1 Capital shareholders.
In a shareholder update on 18 June to the ASX, Platinum said due diligence has now been “substantially completed”, and that Platinum views the deal as being value-accretive for its shareholders.
“The parties have progressed and are now seeking to finalise negotiations of the Merger Implementation Deed which will set out the full terms of the potential merger. Platinum remains of the view that the combination with L1 Capital would deliver value for Platinum shareholders. Any transaction remains subject to final Platinum board approval and an assessment of the best interests of Platinum shareholders.”
However, the deal is likely to change slightly from its original proposal with an adjustment made to the previously disclosed commercial terms regarding shares and performance fees.
“It is now contemplated that immediately following completion of the potential merger, L1 Capital shareholders will own 74 per cent of the shares in Platinum and existing Platinum shareholders will own 26 per cent of the shares in Platinum,” it said.
“The combined entity would receive participation in performance fees relating to the first 3 per cent of absolute returns (gross performance net of management fees) generated by the L1 Long Short Fund with any excess performance fees on returns above 3 per cent in LSF distributed to existing L1 Capital shareholders.”
Shares in Platinum have fallen 53 per cent over the last 12 months while its funds under management stands at $9.6 billion as at the end of April, down from $13.7 billion in April 2024.
Earlier this month, L1 Capital indicated it opposes a plan by Platinum to merge a listed investment company into an ETF. In the case of the Platinum Capital LIC, which is due to be merged into the Platinum International Fund Complex ETF, L1 said it opposed the deal. L1 Capital and its holding company First Maven hold a 16.8 per cent stake in the LIC.
“L1 Capital Pty Limited and the associated entities have since notified the board that they do not support the scheme and do not intend to vote the shares that they hold or control as at the date of the scheme meeting in favour of the scheme.”
AUTHOR
Laura Dew
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