Regal to acquire alternatives manager in $235m deal

regal funds management Regal Partners Limited Alternatives private capital acquisition M&A

4 June 2024
| By Laura Dew |
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Regal Partners has entered into agreement to acquire 100 per cent of private capital and alternative investment specialist Merricks Capital. 

In an ASX statement, the firm said it has entered into a share sale deed to acquire Merricks Capital, a firm founded in 2007 which specialises in private credit and alternative investments in Australia and New Zealand.

Just last week in a shareholder update, chief executive Brendan O’Connor said the firm continues “to monitor a range of opportunities to add additional scale”. 

“We continue to monitor a range of opportunities to add additional scale or expertise to the business. This may include smaller bolt-ons as well as larger transactions. But whatever we explore must not hamper our existing runway for growth, which is substantial.”

As at 30 April 2024, Merricks Capital managed approximately $2.9 billion across three dedicated funds and a number of co-investment vehicles for a broad range of wholesale wealth advisory firms, institutional client groups and family offices.

The consideration is for $235 million, which equates to 6.5x normalised EBITDA in the 2023 calendar year, funded by a combination of existing cash sources and investments on Regal Partners’ balance sheet and is subject to shareholder approval of the deal.

Regal said the transaction will significantly expand its scale and capability in private credit and that there is a strong alignment of interests and highly complementary range of investment strategies between the two firms.

Upon completion, Merricks executive chairman and chief investment officer, Adrian Redlich, will become the chief investment officer for income strategies at Regal and will continue to lead the Merricks business.

The acquisition will bring Regal’s funds under management to $15.1 billion. 

O’Connor said: “Over 17 years, Adrian Redlich and the Merricks Capital team have established themselves as a leading provider of alternative investment solutions, delivering attractive risk-adjusted returns to their investors. 

“The business is well-recognised as being a leader in the provision of innovative financing solutions to the agricultural, commercial real estate and specialised industrial and infrastructure sectors, leveraging the deep experience and capabilities of its 44-person team.

“We are thrilled that Adrian and the Merricks team have chosen to partner with Regal for the next phase of their growth, and we believe that the combination of Regal and Merricks will be exceptionally well-positioned to benefit from the continued growth in opportunities across private credit in Australia and New Zealand.” 

Redlich remarked: “This is a transformational development for the Merricks Capital business and one that will significantly accelerate the scale and opportunity set available to its investors. Regal’s extensive corporate relationships, diverse access to deal-flow opportunities and deeply experienced industry specialists will provide Merricks with a strong foundation for continued growth. 

“Regal’s consistent focus on performance and alignment with its investors resonates strongly with us and we admire the innovative, founder-led culture that the Regal team have developed over many years.”

At the end of 2023, Regal acquired PM Capital and later took a 50 per cent stake in Taurus Funds Management, a specialist provider of mining finance and royalties.

The successful acquisition of PM Capital, it said, has boosted its global long/short capabilities and given Regal exposure to the retail investor channel which has diversified its client mix and relationship network.

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