Platinum sees initial ‘green shoots’ from turnaround
Platinum chief executive Jeff Peters says the firm’s turnaround strategy is beginning to demonstrate “green shoots” amid slowing outflows and improved investment performance.
In February 2024, the firm announced a two-part turnaround strategy focusing on “reset and growth” which it hoped would address net outflows and declining revenue.
In a speech at the firm’s annual general meeting on 12 November, Peters acknowledged the firm had begun 2024 with “major challenges” of troubled investment performance, fund outflows, industry pressure from passives and revenue pressures.
The first strand of the turnaround consisted of reorganising the investment platform away from the same people doing research and portfolio management. This involved separating the research and portfolio management roles, increasing research resources for its flagship International fund and lead portfolio managers appointed to each fund.
This has had the benefit of less complexity, more concentrated portfolios and a more streamlined research effort, he said.
Next was a product line review with several vehicles closed to remove complexity and cost and two listed investment companies merging with active ETFs. Third was greater communication with clients and advisers to understand their needs.
“We continue to engage with our clients and are moving on a second round of engagement, focusing on what we are doing to improve, and we are starting to see the first beginnings of a slowdown in outflows with run rate daily net outflows down 13 per cent since the start of the turnaround in February,” Peters said.
Other early successes include a reduction in expenses, improving investment performance, slowing outflows and target operating model progressing on track.
Chair Guy Strapp added: “Successful turnarounds do not happen overnight and while we are starting to see green shoots, we are only nine months into what is essentially a three-year plan. Jeff has so far delivered exceptionally well on the initial phases of the turnaround and I am confident he will continue to deliver on the next phases of the plan.”
Platinum has now moved onto the “growth” stage of the turnaround where it will add new products and distribute new products by external providers.
“We have also looked at diversifying our product line into asset classes that we aren’t active in but which could be of interest to our clients. In general, new asset classes can be built, bought or accessed from third parties.
“Building is difficult beyond global equities due to our specific focus. Buying is addressed via inorganic strategy which has been spoken of. And while accessing third parties sacrifices some profit, it has the benefits of being quick to market as well as having lower fixed costs and lower capital requirements as partners can contribute seed.”
This is known as the Platinum Partner Series where it will offer exclusive access to top-performing global institutional managers who lack a significant wholesale/retail presence in Australia. The objective of these new relationships is to build a portfolio of subadvisory opportunities over the next three years to expand its reach and grow the business.
“We are in discussions with several such firms and will update the market when we are more advanced in finalising our partnerships. This will be an added source of new revenue over time enabling us to broaden our ability to better serve investors’ needs.”
Meanwhile, Strapp discussed the firm’s potential takeover by Regal Partners which was announced in September. The first offer by Regal was unanimously rejected, but it has since announced a period of due diligence for Regal to potentially make a revised offer.
He said: “This initial period of mutual due diligence [with Regal] is still ongoing and the board will continue to keep the market updated in accordance with continuous disclosure obligations.
“We are also engaged with certain parties who have approached Platinum to explore various forms of transactions, which we will assess, as it relates to both commercial logic and value enhancement for our shareholders – both on their individual merits but also relative to our ongoing standalone restructure and turnaround strategy.”
AUTHOR
Laura Dew
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