Regal Partners reflects on M&A impact on results

Regal Partners has provided a funds under management (FUM) update for the June quarter as its M&A activity drives net inflows higher.

In an ASX update, the firm announced it expects to report net inflows of $0.3 billion for the June quarter. This will bring net inflows for the first half of the calendar year to $0.7 billion.

Regal’s FUM remains at approximately $12.2 billion after deducting $0.3 billion of distributions net of reinvestments. The FUM milestone was first hit at the end of April, up from $11 billion at the end of 2023.

The June quarter also saw an investment performance of approximately $0.4 billion for the fund manager, but this was offset by other factors such as distributions, buybacks, and foreign exchange movements.

Ahead of the release of its 1H24 results on 26 August 2024, Regal currently estimates it will see approximately $55–$56 million in performance fee revenue in the six months to 30 June 2024. The estimation has been driven primarily by a range of Regal Funds Management strategies, alongside funds relating to the PM Capital global strategy.

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Regal entered into an agreement to acquire 100 per cent of private capital and alternative investment specialist Merricks Capital early last month. 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.

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. Moreover, the deal is set to bring its FUM to $15.1 billion.

In a recent shareholder update, chief executive Brendan O’Connor said the investment manager continues “to monitor a range of opportunities to add additional scale”.

“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,” O’Connor commented in May.

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, had boosted its global long/short capabilities, and given Regal exposure to the retail investor channel which has diversified its client mix and relationship network. Prior to this, the firm was primarily concentrated in the institutional market.

The CEO added: “We have multiple opportunities for growth organically and, if we were to do anything inorganically, we will be very disciplined to make sure it’s highly accretive to shareholders.”