L1 Capital, which is bidding to merge with Platinum Asset Management, has indicated it opposes a Platinum deal to convert two LICs into ETFs.
Platinum had announced last year that it would be merging two LICs into its quoted managed hedge funds. Its Platinum Asia LIC would enter a scheme of arrangement to merge with the open-ended Platinum Asia Fund Complex ETF, which is $85 million in size. Meanwhile, the Platinum Capital LIC would enter a scheme of arrangement to merge with the open-ended $284 million Platinum International Fund Complex ETF (PIXX).
This would have the objective of closing the share price discount, creating value for its shareholders and building scale.
These funds were previously called the Platinum Asia Fund (Quoted Managed Hedge Fund) and Platinum International Fund (Quoted Managed Hedge Fund), but were renamed in line with new ETF naming conventions.
A scheme document was provided to ASIC by Platinum on 6 June, acknowledging L1 Capital and its holding company First Maven were a substantial shareholder in the Platinum Capital LIC with a 16.8 per cent stake.
In a subsequent ASX statement on 12 June, the board of Platinum Capital LIC acknowledged these entities did not support the scheme. It did not share its voting intention for the Platinum Asia 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.”
However, it urged shareholders to still support the proposal in the absence of any superior proposal from competing entities.
Platinum said: “As at the date of this announcement, no competing proposal has been received from L1 Capital Pty Limited.
“The board continues to consider the scheme to be in the best interests of shareholders and recommends the scheme be approved at the scheme meeting (in each case, in the absence of a superior proposal).”
Fund manager PM Capital previously made a bid which would have seen its PM Capital Global Opportunities Fund acquire 100 per cent of both Platinum LICs by a scheme of arrangement, but this was rejected by Platinum. PM Capital later said it had received only “limited engagement” from the asset manager.
The fact that the deal is not supported by L1 Capital potentially throws doubt on a potential merger between the two firms. It was announced in May that the two firms were in early-stage talks to create a fund manager with a combined $18 billion in funds under management.
