Regal Partners (RPL) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition expands scale and capabilities in private credit, with credit and royalties now representing nearly 40% of FUM, or AUD 6 billion, and rising from 27% to 41% of group FUM post-deal.

• Adds a highly complementary hard asset investment specialist, diversifying offerings across mining finance, corporate lending, structured credit, agriculture, and infrastructure.

• The deal aligns with the strategic objective to be a leading provider of alternative investment strategies in Australia and Asia, and enhances position in Australia and New Zealand.

• Merricks' founder Adrian Redlich will lead income strategies as Chief Investment Officer, enhancing leadership and expertise.

Financial terms and conditions

• Acquisition price is approximately AUD 235 million: AUD 40 million in cash and 63,934,426 RPL shares at AUD 3.05 per share.

• Share consideration represents up to 85% of total potential consideration, aligning interests, with vendors intending to hold shares for at least 12 months.

• The price reflects a 0.6% discount to 10-day VWAP and a 3% discount to 5-day VWAP.

• Merricks Capital generated AUD 59.7 million in revenue and AUD 35.9 million EBITDA in 2023; deal values Merricks at 6.5x normalised 2023 EBITDA.

• Transaction is immediately accretive to 2024 earnings, pre-synergies, and expected to be EPS accretive in CY2024.

Synergies and expected cost savings

• Synergies are expected to be revenue-related, especially in distribution and product expansion.

• Collaboration between distribution teams aims to deepen penetration in high-net-worth, family office, and institutional channels.

• Offshore distribution capabilities will be leveraged to grow the international investor base.

• Strong alignment of interests with 85% of consideration in shares and vendor commitment to hold shares for at least 12 months.