Release Date: February 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Regal Partners Ltd (ASX:RPL, Financial) reported a normalized net profit after tax of $97.5 million, significantly up from the previous year.
- The company declared a fully franked dividend of $0.18 per share for 2024, reflecting strong cash generation.
- Assets under management increased to $18 billion, with a 25% rise excluding acquisitions.
- The company experienced record net flows of $1.9 billion, with 30% coming from offshore investors.
- Regal Partners Ltd (ASX:RPL) has a strong investment team of over 95 professionals, contributing to robust investment performance and significant performance fees.
Negative Points
- The average management fee decreased slightly from 1.3% to 1.2% due to diversification and acquisitions.
- Employee benefits expenses increased to $88.5 million, reflecting higher fixed and variable remuneration costs.
- The private credit market faced challenges, impacting the performance of the Merrick's Capital acquisition in the second half of 2024.
- The company walked away from a potential acquisition of Platinum due to concerns over fund erosion and price disagreements.
- There is uncertainty regarding the timing of large offshore mandates, which can affect quarterly financial results.
Q & A Highlights
Q: Can you explain the factors driving the sequential improvement in fund inflows throughout the calendar year?
A: Brendan O'Connor, CEO: The growth is primarily driven by offshore investments, with 30% of flows coming from new offshore clients. This is a result of our marketing efforts targeting large allocators to alternative strategies, including sovereign funds in Asia and the Middle East. The sustained strong investment performance by our team has also contributed significantly to this growth.
Q: How are the recent acquisitions like Argyle, Merrick's, and PM Capital performing against expectations?
A: Brendan O'Connor, CEO: PM Capital is performing well, translating strong alpha generation into fundraising success. Merrick's had a softer period initially due to market conditions but is now seeing re-acceleration in activity. Taurus has launched a successful resource royalty strategy, and Argyle continues to market its capabilities to offshore investors.
Q: What does the acquisition pipeline look like, and what areas are you focusing on for potential growth?
A: Brendan O'Connor, CEO: We are looking at opportunities that expand our capabilities or diversify our offerings, such as distribution capabilities and areas like credit and royalties. We are also interested in alternative asset classes we are not currently in.
Q: Can you provide insights into the dividend policy, considering the volatility of performance fees?
A: Brendan O'Connor, CEO: Our dividend policy is to pay out a minimum of 50% of our normalized after-tax profit. This year, the payout ratio was around 70%, reflecting our strong capital position and surplus franking credits. We aim to maintain a flexible approach to dividends as we grow earnings.
Q: What are your thoughts on ASIC's review of private assets, and how might it impact private capital managers?
A: Brendan O'Connor, CEO: We welcome ASIC's review as it aims to improve reporting around private assets. Regal, with its experience in managing both public and private assets, is well-positioned to contribute positively to this process. We see a valuable role for both asset types in the Australian capital markets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
