Regal Partners Acquires Merricks Capital in Strategic Expansion

Highlights:

• Strategic Acquisition: Regal Partners acquires Merricks Capital for approximately AU$235 million, enhancing its investment capabilities and expanding its funds under management to AU$15.1 billion.
• Leadership and Continuity: Merricks Capital founder Adrian Redlich will join Regal as CIO of Income Strategies, continuing to lead the Merricks team and ensuring operational continuity.
• Earnings Impact: The acquisition is expected to be accretive to Regal's earnings per share in 2024, aligning with Regal's growth strategy in alternative investment solutions

Introduction

Regal Partners Limited (ASX: RPL) announced its acquisition of JRJJ Capital Pty Ltd, the head entity of Merricks Capital, a specialist in hard asset investments, for approximately AU$235 million. This acquisition will significantly enhance Regal’s investment capabilities and expand its funds under management.

About Merricks Capital

Founded in 2007 by Executive Chairman and CIO Adrian Redlich, Merricks Capital has a strong track record in private credit and alternative investments in Australia and New Zealand. As of April 30, 2024, it managed around AU$2.9 billion across various funds and co-investment vehicles, serving a diverse client base.

Transaction Details

The acquisition involves a cash payment of AU$40 million and the issuance of 63,934,426 Regal shares at AU$3.05 per share. Additionally, Regal will issue 10,942,459 unlisted options to Merricks Capital employees, contingent on meeting specific profit targets. The completion of the transaction is subject to shareholder approval at an extraordinary general meeting scheduled for early July 2024.

Strategic Benefits

Post-acquisition, Adrian Redlich will join Regal Partners as CIO of Income Strategies, continuing to lead the Merricks team. This addition will boost Regal’s funds under management by 24%, reaching AU$15.1 billion on a pro forma basis as of April 30, 2024.

Executive Insights

Regal Partners CEO Brendan O’Connor highlighted Merricks Capital's leadership in alternative investment solutions, particularly in agriculture, commercial real estate, and specialized industrial sectors. He emphasized the strategic fit and anticipated growth in private credit opportunities.

Adrian Redlich expressed enthusiasm for the partnership, citing the potential for accelerated growth and enhanced investment opportunities. He affirmed Merricks Capital’s commitment to maintaining its core team and operational independence while leveraging Regal’s extensive resources.

Conclusion

The acquisition is expected to be earnings accretive for Regal in 2024 and aligns with its vision of being a leading provider of alternative investment strategies in Australia and Asia. An investor briefing detailing the acquisition will be held on June 3, 2024.

Customer Notice:

Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.

Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com