Platinum Asset Management (ASX: PTM) has announced it’s in preliminary discussions with L1 Capital, a Melbourne-based hedge fund, regarding a potential merger. This strategic move could create a combined entity managing approximately $18 billion in funds, with an estimated valuation of $1.3 billion based on Platinum’s current share price. The proposed merger aims to leverage the complementary strengths of both firms, offering shareholders greater scale, diversification of investment strategies, and access to expanded distribution channels. Furthermore, the merger is expected to deliver substantial cost efficiencies.
Under the proposed terms, Platinum would acquire L1 in exchange for shares, resulting in L1 shareholders holding a 75% equity stake in the merged company, while Platinum shareholders would retain the remaining 25%. This ratio considers L1’s performance fee structure, where the combined entity participates in fees related to the first 5% of absolute returns generated by L1’s long-short funds. Platinum CEO Jeff Peters highlighted the merger as an attractive opportunity to combine expertise and resources. L1 co-founders Mark Landau and Raphael Lamm echoed this sentiment, emphasizing the compelling value proposition for Platinum shareholders and the potential for improved resourcing and capabilities across investments, client service, and operations.
