VGI Partners Limited (VGI:ASX) has entered exclusivity and signed a non-binding term sheet with specialist alternative investment manager Regal Funds Management Pty Limited in relation to a proposed merger.
The Proposed Merger would combine two of Australia’s most recognised and successful hedge fund managers and create a market-leading provider of alternative investment strategies with total funds under management of over A$6 billion.
The Proposed Merger, which would be subject to VGI shareholder approval, would involve VGI acquiring 100% of Regal in consideration for the issue of new ordinary shares in VGI to existing Regal shareholders.
The anticipated shareholding of the merged entity at completion of the Proposed Merger, after adjusting for cash, liquid assets and other investments being respectively contributed, being approximately 60% current Regal shareholders and 40% current VGI shareholders.
It is anticipated that VGI would be re-named and its ticker changed to reflect the combined businesses on or after completion of the Proposed Transaction.
Entering into a definitive agreement remains subject to each of VGI and Regal completing confirmatory due diligence, the negotiation of the terms of a binding merger implementation agreement, and final board approvals of each of VGI and Regal.
Potential benefits
If the Proposed Merger proceeds, it has the potential to deliver several attractive benefits for VGI shareholders, including the following:
- The creation of a market-leading alternative investment manager with over A$6 billion in funds under management, with exposure to a diversified and growing platform of hedge fund, private market and real asset investment strategies for institutional, high net worth and retail investors in Australia and offshore
- Combining the deep industry experience, networks, and the long investment track records of two industry leaders – Robert Luciano and Philip King – and their respective investment teams, coupled with the management teams of VGI and Regal and their history in creating innovative and well-regarded alternative investment products
- Leveraging complementary client profiles and relationships across the combined group, including existing long-term relationships with high net worth individuals and family offices within VGI and Regal, alongside a combined retail investor base of over 20,000 investors across VGI Partners Global Investments (ASX:VG1), VGI Partners Asian Investments (ASX:VG8) and the Regal Investment Fund (ASX:RF1)
- Accessing Regal’s highly developed corporate platform and business support network, including a well-established marketing and distribution capability, to provide a refreshed approach to sales, marketing and communication activities across the merged entity and reduce non-investment related activities undertaken by Robert Luciano and the VGI team
- Provide an opportunity for Robert Luciano and the VGI investment team to leverage additional resources from the merged group, including Regal’s extensive investment capability and track record investing in Asian equity markets and private unlisted investments
