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Highlights

  • Platinum shares fell 3% to AUD 0.485 following merger announcement with L1 Capital.

  • L1 Capital shareholders will own 74% of the merged entity; Platinum shareholders retain 26%.

  • Merger expected to deliver AUD 20 million in annual cost synergies and double-digit EPS growth.

Shares in Platinum Asset Management Ltd (ASX:PTM) declined on Tuesday despite the company announcing a merger implementation deed with L1 Capital, the investment manager behind L1 Long Short Fund Ltd (ASX:LSF). Platinum’s stock was trading 3% lower at AUD 0.485 during intraday trade as investors reacted cautiously to the terms of the proposed deal.

The fund manager confirmed it had entered into a binding agreement outlining the merger’s key terms. Subject to regulatory and shareholder approvals, Platinum will acquire 100% of L1 Capital’s issued share capital. In return, new Platinum shares will be issued to existing L1 Capital shareholders.

Under the agreed terms, L1 Capital shareholders will control 74% of the combined group, while existing Platinum shareholders will retain a 26% stake. The restructuring highlights the scale and influence L1 Capital will have in the new entity, which is expected to manage approximately AUD 16.5 billion in assets post-merger.

The merger terms also include a detailed performance fee structure. Platinum shareholders will receive in-perimeter performance fees on the first 3.5% of absolute returns (after management fees) from L1 Capital’s Long Short funds and mandates. Any performance fees beyond that threshold will be retained by L1 Capital shareholders.

Platinum’s management believes the merger offers strategic value, creating a leading provider of listed and alternative investment solutions. The deal is projected to unlock AUD 20 million in annual pre-tax cost synergies and deliver significant earnings growth for shareholders.

The fund manager estimates that the transaction will be double-digit earnings per share (EPS) accretive within the first 12 months of completion and more than 30% EPS accretive by FY 2027. The company positions this financial outlook as a compelling benefit for current investors amid ongoing structural changes in the funds management sector.

Guy Strapp, Chair of Platinum Asset Management, expressed confidence in the strategic fit between the two firms. “The Platinum Board is unanimous in its view that this transaction is in the best interests of shareholders,” he said. “We believe the combination with L1 Capital provides a catalyst to deliver strong outcomes for shareholders and investors, creating a high-quality manager with a strong heritage, world-class investment talent and scale.”