Regal to acquire minority stake in specialist manager
Regal Partners has announced its latest acquisition, taking a minority stake in a specialist asset manager.
In an ASX statement, the firm said it has entered into an agreement to acquire a minority interest in Queensland-based Argyle Group which has $1.4 billion in funds under management.
Argyle is a specialist asset manager of Australian water entitlement portfolios, and Regal said it will sit within its real and natural assets portfolio.
“The transaction will further expand Regal Partners’ growing capabilities across the highly attractive Australian water entitlements market and, on completion, will increase total pro forma FUM across Regal’s real and natural assets strategies to $2.1 billion and across the RPL group to approximately $16.4 billion.
“Regal expects the transaction to be modestly accretive to Regal’s earnings per share in calendar year 2024, without assuming any synergies.”
Argyle was founded in 2007 and based in Brisbane, focusing on investing in water and agriculture on behalf of domestic and offshore institutional investors, private wealth advisory groups and direct wholesale investors.
Regal has agreed to acquire 40 per cent of the issued share capital of Argyle Group Holdings Pty Ltd and 40 per cent of the issued units of Argyle Group Holdings Trust.
The transaction follows a corporate restructure of Argyle, which will see the divestment of Argyle’s agricultural investment management business and establish Argyle as Australia’s largest “pure-play” water entitlements investment manager.
On completion, Argyle’s key management personnel will continue to retain their 60 per cent stake in Argyle Holdings and Argyle Trust, with Argyle’s longstanding water investment team under chief investment officer Kim Morison and investment director Louise Kerber maintaining their ongoing investment management of Argyle’s water portfolios.
The total consideration for the transaction is $12 million, subject to customary net debt and working capital adjustments, and will be paid in cash which is expected to be funded from Regal’s existing cash sources. The expected completion date of the acquisition is before the end of July 2024.
Regal Partners’ chief executive Brendan O’Connor said: “We are excited about the benefits that Australian water entitlements can deliver to diversified portfolios and the broader outlook for the water market as a whole.”
Morison said: “We are pleased to partner with Regal, a leading provider of alternative investment strategies, in Argyle’s next stage of growth as a pure-play water investment manager.”
Last month, Regal announced it would acquire private capital and alternative investment specialist Merricks Capital in a bid to become a leading provider of private credit. 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 6.5 times 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.
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.
AUTHOR
Laura Dew
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