Regal Partners has shared information on how the acquisition of Merricks Capital is helping progress its private credit goals.
The firm announced in June that it plans to acquire 100 per cent of alternative asset manager Merricks Capital. This is a hard-asset investment specialist founded by Adrian Redlich in 2007 focused on private credit across commercial real estate, agriculture and specialized industrial and infrastructure assets which has $2.9 billion in funds under management (FUM).
Regal is proposing to pay $235 million for the acquisition including a cash consideration of $40 million, funded from existing cash sources and investment on balance sheet and subject to shareholder agreement.
Overall Regal FUM is expected to grow from $12.2 billion in April 2024 to $15.1 billion with around $6 billion sitting in private credit assets.
Explaining the rationale behind the deal at an extraordinary general meeting (EGM) on 8 July, chief executive Brendan O’Connor said the firm has a “highly positive” outlook for the future of private credit.
The Australian private credit market has already seen a 23 per cent compound annual growth rate from 2015 to 2023, it said.
Through the acquisition, Regal aims to become a leading provider of financing solutions in Australia and New Zealand with demand for credit solutions expected to accelerate as traditional providers withdraw from the market.
“The transaction significantly expands Regal’s scale and capability in private credit, an asset class that is rapidly growing. This is particularly important given private credit is an asset class where scale, underwriting expertise and consistent access to attractive deployment opportunities are all key contributors to positive returns.
“Following the completion of the transaction, private credit and capital solutions is expected to represent around $6 billion or 40 per cent of Regal’s total funds under management.”
Merricks’ alternative lending strategies will diversify the range of solutions and provide broader investment opportunities which will help Regal build on its existing strategies in private credit and listed credit.
It also has a highly complementary fund range to Regal, an experienced investment team and a strong alignment of interests. Post-completion, Redlich is slated to remain at the firm as Regal’s chief investment officer for income strategies.
