Platinum Asset Management has announced it will merge its two listed investment companies (LIC) with two of its quoted managed hedge funds off the back of a strategic review.
In May, the firm put two of its listed investment companies – the $379 million Platinum Asia and $452 million Platinum Capital – under review to consider how it can build scale and whether it should be converted into open-ended fund structure.
In statements to the ASX for each of the funds at the time, Platinum said: “Over the last couple of years, the board has observed a trend away from closed-ended investment vehicles, particularly those that lack sufficient scale to generate the liquidity required to maintain share prices close to the underlying net tangible assets. Unfortunately, [the funds] have not been immune from the effects of this general market sentiment.”
The firm said it had already undertaken multiple initiatives on both PAI and PMC funds in a bid to create shareholder value but that these have been unsuccessful.
Following a number of strategic options presented to the board by an independent adviser, Platinum said it has now confirmed the next steps for the vehicles, subject to approval.
Its Platinum Asia LIC will enter a scheme of arrangement to merge with the open-ended Platinum Asia Fund (Quoted Managed Hedge Fund) which is $85 million in size.
Meanwhile, the Platinum Capital LIC will enter a scheme of arrangement to merge with the open-ended $284 million Platinum International Fund (Quoted Managed Hedge Fund).
This option will allow shareholders to continue to access Platinum’s investment strategy via an ASX-quoted vehicle with the same investment objective as the LIC and hold units that will trade close to their net asset value.
This will meet the board’s objective of closing the share price discount.
Earlier this year, the firm’s chief executive, Jeff Peters, announced a two-part “growth and reset” turnaround strategy for the company.
A short-term phase over the next one to four months – reset phase – will include alignment of its expense base to current revenue conditions, review of product offering, renewal of client communication strategy, deep examination of its investment platform and review remuneration framework.
A second phase over the next six months – growth phase – will implement recommendations, build improved product and distribution capabilities through new channels, explore inorganic and organic growth opportunities for diversification, and complete back-office outsourcing projects.
