In its monthly funds under management (FUM) update on Tuesday, the Australian-based investment manager said it saw its FUM decrease from $10.76 billion in February to $10.28 billion in March.
Platinum experienced net outflows of approximately $302 million during the month, which included outflows of $252 million from the Platinum Trust Funds.
Notably, net outflows in March are a substantial rise on January’s result of $160 million, which at the time had become Platinum’s lowest reported outflows in 18 months.
The investment manager announced that its co-chief investment officers Andrew Clifford and Clay Smolinski would step down from their roles, effective 3 March.
Clifford, who worked at Platinum for 31 years and was CEO for a period, stepped down from the CIO role and management of the flagship Platinum International Fund. Similarly, Smolinski, while technically on a leave of absence for a period of six months, stepped down from CIO role and his duties as portfolio manager of the flagship fund.
The firm is currently without a CIO as it has yet to formally name a replacement.
Following the leadership shake-up, Morningstar said the exits of Clifford and Smolinski meant redemptions risks would rise, given the longstanding tenure and brand recognition of the pair.
Platinum’s FUM was projected to decline from $13 billion to $3 billion by FY2028–29, driven by outflows averaging 33 per cent of FUM per annum.
“Clifford and Smolinski’s departures may see outflows given their long tenures. While there’s a successor, Ted Alexander, team stability and redemption risks have risen. We note investors’ confidence in Platinum was largely underpinned by the former two,” Morningstar equity analyst Shaun Ler said.
“There is potential for client redemptions. It is likely to take time for investors to gain confidence in Alexander. There may also be concerns about ongoing cost reductions and restructuring – including headcount reductions – across the broader group, which could impact research capabilities.”
PM Capital responds to Platinum’s fresh rejection
On Monday, Platinum Asset Management rejected a bid from PM Capital to acquire two of its listed investment trusts.
At the end of February, PM Capital stated it had made a non-binding, indicative proposal to acquire 100 per cent of Platinum Capital and Platinum Asia Investment by way of a scheme of arrangement with the PM Capital Global Opportunities Fund.
However, Platinum Investment Management, in its capacity as responsible entity of the Platinum International Fund (PIXX), submitted a confidential and non-binding proposal last year to merge Platinum Capital Limited (PMC) with PIXX under a scheme of arrangement.
On Monday, Platinum announced to the ASX that an independent board had rejected PM Capital’s bid on the grounds that the proposal was not superior to Platinum’s plan to merge PMC with PIXX.
The bid was rejected for four reasons, including that the Platinum proposal achieves the PMC board’s primary objectives to solve the discount on an ongoing basis while retaining investors’ chosen investment manager and strategy, and that it is in line with industry trends and investor sentiment.
In a market update to the ASX on Tuesday, PM Capital responded by saying that it was “surprised” by the outcome, reaffirming its belief that its proposal would offer shareholders “significantly better financial outcomes compared to the existing Platinum Schemes”.
Noting that it has had little engagement with the boards of PMC and PAI over the last six weeks or so since the proposal was lodged, PM Capital said that it is not clear on what basis the boards came to their conclusion.
“PGF continues to believe that PMC and PAI’s decision to further proceed down the path of the Platinum Schemes continues to see forgone value creation for long-suffering PMC and PAI shareholders,” the company added.
Moreover, it also highlighted “recent changes” to the Platinum investment team which, it said, will “directly impact PMC and PAI”, creating a “high level” of disruption within Platinum and “ongoing uncertainty” for its team.
“We remain open to re-engaging with the PMC and PAI boards at a future date, should it be
appropriate to do so.”
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