Regal Partners CEO Brendan O’Connor has warned that retail investors entering private credit funds may be underestimating the ease with which they can withdraw their investments. Regal Partners is an ASX-listed alternative asset manager co-founded by Phil King. The company manages funds across a range of alternative investment strategies, including hedge funds, private equity, and real estate.
The comments come as Regal reported a 97 per cent increase in full-year net profit to $130.5 million, with performance fees surging 105 per cent to $172.59 million. Earnings per share hit a record 37.5¢, and the board declared a final dividend of 15¢ a share. Regal’s funds under management swelled to $21.2 billion in January amid growing demand for hedge funds and private assets. However, O’Connor noted that some clients had “overestimated the liquidity that exists in these products,” saying private credit is better suited to a medium-term investment horizon.
O’Connor’s remarks follow news that American private lender Blue Owl froze redemptions for an unlisted fund marketed to retail investors, rattling confidence in the sector. He also reminded investors that Regal and its subsidiary Merricks’ private credit funds have no leverage and invest in hard assets immune from AI disruption, distinguishing them from AI-driven software private credit exposures prevalent in the US market. Last July, Merricks Capital’s flagship fund delayed redemptions, citing a lack of “unallocated cash”.
The positive results and O’Connor’s commentary led to a 4.82 per cent rally in Regal shares, closing at $3.26 on Tuesday. O’Connor also highlighted Regal’s investment in AI infrastructure company Firmus Technologies, anticipating a potential IPO later this year. He added, “We have increased our exposure to private assets while increasing our exposure to performance fee eligible hedge fund product, with a fixed fee hurdle leading to more resilient earnings.”
